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HESS 

^hiloponhy  snd  Methods  of  Operation  of 

the  Analytic  system  for  the  Measurement 
of  Relative  Fire  Hazard 


imt^ 


Philosophy  and  Methods  of 

Operation 


or  THE     "*-*'^-  '►"■-" 


ANALYTIC  SYSTEM 

FOR  THE 

MEASUREMENT 

OF 

RELATIVE  FIRE  HAZARD 

( Mercantile  Classes) 


PAPERS  READ  BEFORE  THE 

FIRE  INSURANCE  CLUB 


OF 
CHICAGO 

1908-1909 


H.  M.   HESS 


CHICAGO 

19U9 


1 


\PhiIosophy  and  Methods   of 

Operation 

OF  THE 

ANALYTIC  SYSTEM 

KOR  THE 

MEASUREMENT 

OF 

RELATIVE  FIRE  HAZARD 

( Mercantile  Classes) 


PAPERS  READ  BEFORE  THE 

FIRE  INSURANCE  CLUB 


OF 
CHICAGO 

1908-1909 


H.   M.   HESS 


CHICAGO 

1909 


•     **  •  •  ^  *  ^         <■     * 


«    •    C       9 


•      •       -      «  •*' 


Copyright  1908  ami  1909,  by  H.  M.  Hess 


Philosophy 


OF  THE 


Analytic  System 


November  24,  1908 


THE  PROBLEM  OF  FIRE  INSURANCE  RATING. 


At  the  outset  of  this  series  of  papers  on  ilic  Analytic  System 
I  ask  two  favors  of  you.  In  the  first  place,  I  ask  that  you  approach 
this  subject  wi:h  mc  in  the  attitude  of  the  student.  In  teaching  this 
system  we  long  ago  learned  that  a  man  who  had  not  previously 
worked  with  any  other  system  mastered  the  principles  and  details 
much  more  easily  than  he  who  had  to  relieve  his  mind  and  methods 
of  old  ideas  and  practices  in  order  to  make  way  for  the  new.  So  I 
ask  you  to  banish  from  your  minds  all  previously  formed  ideas  of 
schedule  rating  and  to  assume  as  far  as  possible  an  open,  impartial, 
unprejudiced  attitude.  If  tliis  is  done,  we  will  find  that  we  can  the 
more  easily  follow  the  main  ideas  and  principles  of  the  schedule. 
I  shall  probably  say  a  good  many  things  with  which  you  will  not 
agree  in  whole  or  in  part.  We  would  not  be  insurance  men  if  we 
all  agreed.  Let  us  try  to  discover  and  understand  the  main  ideas 
of  the  Analytic  System,  and  not  let  any  disagreement  over  minor 
points  interfere  with  our  study. 

In  the  second  place,  I  ask  you  to  allow  me  to  take  the  position 
of  an  expositor,  rather  than  a  defender.  I  am  not  here  to  defend 
the  schedule.  Doubtless  as  we  proceed  a  clear  understanding  of  its 
principles  and  details  will  result  in  the  schedule  defending  itself. 
It  always  has.  But  /  shall  not  ask  you  to  agree  with  mc  that  the 
Analytic  System  is  the  only  system.  Did  the  schedule  need  such 
defense,  there  are  those  more  experienced  than  T  whom  your  com- 
mittee would  have  called  upon.  I  wish  merely  to  explain  the  system 
and  shall  make  no  argumentative  attempt  to  deprive  you  of  your 
much  cherished  privilege  to  draw  your  own  conclusions. 

The  above  applies  to  all  that  we  shall  have  to  say  in  the  three 
or  four  papers  on  the  system.  Fortunately,  we  have  been  able  to 
sub-divide  the  subject  into  its  natural  divisions,  and  tonight  shall 
attempt  to  discuss  only  one  side  of  a  very  broad  subject.  It  is  per- 
fectly natural  to  treat  this  subject  in  two  general  parts,  principles 
and  details.  In  the  present  paper  I  propose  to  treat  only  of  the 
philosophy  of  the  system,  the  principles  upon  which  it  is  constructed. 
You  will  have  to  be  patient  with  so  much  theory,  for  we  shall 
speak  only  of  theory  tonight,  leaving  the  actual  study  of  the  system 
to  the  later  papers.  I  would  not  thus  try  your  patience  were  it  not 
necessary  to  any  sort  of  an  understanding  of  the  details  of  the, 
system.  Napoleon  Bonaparte  said,  "Get  your  principles  right,  then 
'tis  a  mere  matter  of  detail."  Tonight  we  shall  attempt  to  under- 
stand the  principles  of  the  system.  This  is  more  important  than 
detail.     For  if  we  are  wrong  in  principle,  our  details  are  worthless. 


But  if  we  are  right  in  principle,  the  working  out  of  the  right  details 
is  merely  a  matter  of  time.  I  hope  that  all  who  intend  to  study  the 
system  with  us  either  are  here  tonight  or  will  read  this  paper  before 
we  take  up  any  of  the  later  papers.  Since  I  consider  this  first  one 
necessary  to  a  proper  understanding  of  the  others,  your  speaker 
would  be  seriously  handicapped  by  a  lack  of  understanding  on  your 
part  of  the  principles  of  the  system. 

In  our  study  of  principles  we  must  necessarily  lift  ourselves 
above  details;  let  us  drop  details  completely  and  place  ourselves 
in  a  position  where  we  can  look  over  the  broad  valley  of  fire  in- 
surance and  secure  a  bird's-eye  view  of  the  business,  not  distorted 
by  this  or  that  detail,  which  viewed  close  at  hand  looms  large,  but 
which  at  a  distance  resumes  its  proper  relation  to  other  details. 

Fundamental  Theory  of  Schedule  Rating. 
Done  with  introductions,  we  are  face  to  face  with  our  problem. 
We  are  studying  a  system  that  purports  to  analyze  fire  hazard 
and  make  fire  insurance  rates.  The  Analytic  System  is  not  the 
only  system  or  "schedule"  for  making  rates.  Their  name  is 
legion  and  they  have  been  used  for  many  years.  I  have  not  time 
and  it  is  not  necessary  to  our  study  to  tell  you  the  very  interesting 
story  of  schedule  rating.  We  will  be  content  with  mentioning  the 
first  application  of  any  schedule  in  the  United  States  as  far  as  we 
have  been  able  to  find  out.  And  at  the  same  time  this  incident 
will  serve  to  emphasize  the  main  object  of  schedule  rating,  namely, 
to  make  rates  that  will  measure  the  fire  hazard.  Philadelphia  has 
the  honor  of  the  first  "schedule."  In  1782  the  single  company  then 
doing  business  suddenly  decided  to  prohibit  the  insurance  of  houses 
"having  a  tree  or  trees  planted  before  them."  This  was  either  due 
to  the  fact  that  shade  trees  interfered  with  the  fire-fighters  in  case 
of  fire,  or  to  the  danger  from  lightning,  which  was  considered  in- 
creased by  these  trees.  This  action  resulted  in  the  formation  of  a 
new  insurance  company  by  those  that  had  trees  planted  in  front  of 
their  houses.  This  company,  of  course,  also  carried  insurance  on 
houses  without  trees,  and  the  hazard  of  the  shade  trees  was  covered 
by  a  higher  rate. 

Today  we  do  not  stop  at  shade  trees  alone.  We  have  schedules 
of  rating  which  make  charges  or  credits  for  every  tangible  thing 
about  a  risk  that  can  in  any  possible  way  affect  the  fire  hazard. 
We  give  a  building  a  reduction  in  rale  if  the  owner  removes  a 
dangerous  stovepipe.  We  give  a  reduction  in  rates  to  a  whole  state 
for  a  continuing  small  amount  of  losses.  I  wish  to  point  out  the 
more  general  classes  of  hazard  which  should  be  recognized  by  any 
just  system  of  making  rates  and  to  show  to  what  extent  these 
hazards  have  been  recognized  by  schedules  previous  to  the  Analytic 
System. 


Three   Elements   Recognized. 

We  all  know  that  rates  on  buildings  are  afTected  by  their  in- 
dividual characteristics,  such  as  construction,  occupancy,  protection, 
public  and  private,  and  exposures.  We  all  know,  or  should  know, 
that  rates  on  buildings  in  one  state  are  higher  or  lower  than  on 
buildings  in  another  state,  even  though  they  are  constructed,  occu- 
pied, protected  and  exposed  in  exactly  the  same  way.  And  we  all 
know,  or  should  know,  that  rates  on  buildings  today  probably  are 
higher  or  lower  than  on  the  same  buildings  five  or  ten  years  ago. 
We  not  only  find  that  all  differences  in  rates  can  be  attributed  to 
one  of  these  three  classes  of  hazard,  but  also  are  of  the  opinion  that 
an  adequate  schedule  should  properly  recognize  each  and  all  of 
them. 

Element  of  the  Risk  Itself. 

The  first  one  of  these  general  class<-s  of  hazard  covering  con- 
struction, occupancy,  public  and  private  protection  and  exposure  has 
been  so  long  and  so  generally  recognized  and  understood  that  we 
barely  need  to  mention  it.  Any  system  that  professed  to  be  a  system 
recognized  these  items  in  some  way.  Up  to  1896  the  schedules  used 
in  the  United  States  at  large,  with  the  exception  of  a  few  of  the 
larger  cities,  were  crude  minimum  tariffs,  which  covered  these  items 
in  a  very  general  way.  By  means  of  these  tariffs  the  special  agents, 
by  whom  all  rates  were  made  at  that  time,  were  enabled  to  make 
rates  that  were  fairly  adequate  for  the  business  as  it  was  then 
carried  on.  In  1893  the  Universal  Schedule  was  formulated, 
adopted  and  published.  It  also  recognized  these  features  of  hazard, 
but  in  a  much  more  complete  and  equitable  manner  than  the  old 
minimum  tariffs.  By  these  schedules  the  insurance  business  and 
the  public  have  slowly  been  educated  up  to  the  point  where  a  recog- 
nition of  these  features  is  accepted.  Every  wideawake  business 
man  today  appreciates  the  fact  that  his  rate  depends  upon  these 
items  of  construction,  occupancy,  protection  and  exposure.  He 
knows  that  he  makes  his  own  rate.  He  knows  how  much  fire 
insurance  premium  he  can  save  by  the  removal  of  a  defect.  He 
knows,  or  can  find  out,  why  he  pays  more  or  less  than  his  neighbor, 
and  even  if  his  own  rate  is  the  higher,  he  generally  recognizes  its 
justice.  The  fire  insurance  companies  are  able  to  justify  differences 
in  rates  of  different  buildings.  Hazardous  features  are  removed  and 
the  losses  decreased.  The  local  agent  knows  that  his  companies  are 
committed  to  a  certain  schedule  and  to  certain  rates  as  made  by 
that  schedule,  and  his  business  is  placed  upon  a  business  footing. 

Element  of  Place. 

Insurance  men  and  property  owners  do  not  as  generally  accept 
or  understand  the  second  class  of  influences  that  affects  fire  rates. 


Little  is  said  and  less  done  about  the  difference  in  experience  and 
the  resulting  difference  in  rates  in  various  parts  of  the  country. 
I  am  not  speaking  now  of  those  differences  in  localities  which  can 
be  listed  and  properly  charged  for,  such  as  difference  in  rainfall, 
frequency  of  high  winds,  etc.  I  refer  rather  to  those  unknown 
differences  which  cause  a  difference  in  experience,  but  which  cannot 
be  detected.  A  glance  at  the  average  relation  of  loss  to  amount  at 
risk  in  several  states  shows  us  such  a  wide  divergence  that  we 
are  forced  to  provide  for  it  in  some  way  other  than  by  specific 
charge. 

The  average  "burning  rate,"  or  "loss  cost,''  seems  to  increase 
as  we  go  westward.  In  22  states  selected  at  random  we  find  8  states 
cast  of  Ohio  with  an  average  burning  rate  of  33  cents  per  $100.00 
for  thirteen  years,  and  14  states  zvest  of  the  same  dividing  line  with 
an  average  burning  rate  of  79  cents,  about  44  per  cent  higher. 
The  average  for  the  last  twenty  years  shows  that  Wisconsin  burned 
72  cents  for  every  $100.00  at  risk,  and  Texas  89  cents.  We  must 
acknowledge  that  some  of  this  large  difference  is  due  to  difference 
in  construction  or  protection,  to  more  brick  buildings,  more  fire- 
proof buildings  and  more  sprinklered  risks  in  the  territory  showing 
the  lower  burning  rate.  There  still  remains,  however,  a  difference 
that  cannot  be  accounted  for  by  any  known  cause.  I  am  antici- 
pating when  I  say  that  the  Analytic  System  has  been  providing  for 
this  difference  in  burning  rate  in  various  localities  for  the  last 
five  years. 

An  examination  of  existing  schedules  shows  that  the  difference 
in  the  burning  rate  of  the  several  states  has  been  recognized  and 
provided  for  to  a  certain  extent.  We  find  that  the  old  minimum 
tariffs  were  divided  by  state  lines  and  produced  different  rates  in 
the  several  states.  This  was  done  by  a  difference  in  basis  rate  alone 
or  by  a  general  difference  in  the  schedules,  basis  rates  and  charges. 
Uniformity  in  charges,  or  relations  between  charges,  was  not  at- 
tempted, and  the  result  was  an  accumulation  of  tariffs,  the  compari- 
son of  which  brought  out  inconsistencies  that  could  not  possibly  be 
defended.  The  Universal  Schedule,  however,  recognized  this  un- 
explainable  difference  in  burning  rates  by  providing  for  a  20  per 
cent  charge  when  the  loss  exceeded  50  cents  per  $100.00  of  insurance 
for  five  years.  Loss  ratios  below  55  per  cent  for  a  three-year 
period  were  also  recognized  by  the  same  schedule.  Any  adequate 
system  of  rating,  therefore,  if  it  is  to  conform  to  statistics  of  losses 
and  to  what  has  already  been  partially  recognized  in  preceding 
schedules,  must  provide  some  proper  means  of  measuring  the  dif- 
ference in  burning  rates  in  various  parts  of  the  country. 

Element  of  Time. 

The  third  general  class  of  hazard  with  which  we  have  to  deal 

8 


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PLATE  NO.   1.    WISCONSIN. 

Plate  No.  1  shows  the  fluctuation  of  the  annual  burning  rate 
or  loss  cost,  and  also  of  the  annual  rate  of  premium  fur  21  years, 
from  1887  to  1907,  inclusive.  The  average  burning  rate  or  loss 
cost  and  the  average  rate  of  premium  for  the  same  period  are 
also  shown.  The  figures  arc  computed  for  the  amount  of  loss 
and  the  amount  of  premium  for  each  $100.00  of  insurance. 

Lower  crooked  line — annual  Inirning  rate  or  loss  cost. 

Lower  straight  line — average  burning  rate  or  loss  cost. 

Upper  crooked  line — annual  rate  of  premium. 

Upper  straight  line — average  rate  of  premium. 


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PLATE  NO.  2.     TEXAS. 

Plate  No.  2  shows  the  fluctuation  of  the  annual  burning  rate 
or  loss  cost,  and  also  of  the  annual  rate  of  premium  for  21  years, 
from  1887  to  1907,  inclusive.  The  average  burning  rate  or  loss 
cost  and  the  average  rate  of  premium  for  the  same  period  are 
also  shown.  The  figures  are  computed  for  the  amount  of  loss  and 
the  amount  of  premium  for  each  $100.00  of  insurance. 

Lower  crooked  line — annual  burning  rate  or  loss  cost. 

Lower  straigin  line — average  burning  rate  or  loss  cost. 

Upper  crooked  line — annual  rale  of  premium. 

Upper  straight  line — average  rate  of  prmiium. 


10 


is  still  more  dirficult  to  understand  and  is  even  less  generally  recog- 
nized than  the  two  preceding  classes.  The  general  relation  between 
the  tire  hazard  of  buildings  does  not  change  to  any  great  extent. 
The  danger  from  fire  in  a  frame  building  badly  exposed  and  poorly 
protected  is  just  as  much  greater  than  that  in  a  brick  building  un- 
exposed and  well  protected,  other  ihings  being  equal,  today  as  it 
was  last  year  or  will  be  next  year.  In  the  same  way  the  general 
relation  between  the  burning  rates  of  ditTerent  parts  of  the  country 
does  not  change  to  any  extent.  The  burning  rale  in  the  14  western 
states  mentioned  shows  about  the  same  relation  to  that  in  the  8 
eastern  slates,  whether  we  select  the  thirteen  years  given  or  the 
thirteen  years  immediately  preceding.  Differences  in  hazards  in 
buildings  or  in  localities  today  were  differences  yesterday  and  will 
stay  differences  tomorrow.  Yet  we  find  our  losses  changing  in 
amount  from  year  to  year  according  to  no  general  law  that  we  can 
discover,  except  the  law  that  they  must  change.  For  several  years 
our  records  may  show  heavy  losses  in  all  localities  and  on  all 
classes  of  business.  Then  again  the  pendulum  may  swing  ttie 
other  way  and  for  a  time  losses  will  be  light  and  the  companies 
prosperous  and  reckless.  Sometimes  we  are  able  to  account  for 
these  annual  fluctuations  by  unusual  weather  conditions  of  rain  or 
drought,  or  by  increase  or  decrease  of  moral  hazard  due  to  business 
depression  or  prosperity.  The  vagaries  of  the  weather  man,  the 
failure  or  success  of  crops  and  the  manipulation  of  Wall  Street 
have  not  yet  permitted  themselves  to  be  subjected  to  scientific 
analysis,  and  we  are  forced  to  class  these  influences  along  with 
other  factors  as  not  to  be  measured  by  specific  charges. 

Element  of  Time  Illustrated. 

To  illustrate  the  range  ami  frequency  of  this  ever  changing 
experience  which  must  be  provided  for  in  any  schedule  which  is 
to  be  permanent  we  need  only  to  turn  to  tabulated  statistics. 
We  find  among  the  few  classes  for  which  figures  were  obtainable 
that  the  burning  rate  or  loss  cost  is  constantly  fluctuating.  In  one 
class  it  ranged  from  34  cents  to  98  cents  per  $100.00  and  back 
again  in  four  years;  in  another  from  66  cents  up  to  $1.33  and  then 
back  to  70  cents.  The  experience  in  the  various  states  shows  the 
same  fluctuation.  In  Wisconsin  the  burning  rate  has  ranged  from 
50  cents  to  $1.19  in  the  last  twenty-one  years  (Plate  No.  1)  ;  in 
Texas,  from  60  cents  to  $1.30  for  the  same  period  (Plate  No.  2)  ; 
in  New  York,  from  26  cents  to  47  cents  (Plate  No.  3)  ;  and  in  a 
prominent  Western  State,  from  40  cents  to  77  cents  (Plate  No.  4). 
Even  the  United  States  as  a  whole  is  subject  to  this  same  experience. 
In  the  last  eighteen  years  the  burning  rate  for  the  entire  country 
ranged  from  50  cents  up  to  78  cents,  exclusive  of  the  year  1906,  when 
the  San  Francisco  fire  raised  it  to  $1.17  per  $100.00  (Plate  No.  5). 

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PLATE  NO.  3.     NEW  YORK. 

Plate  No.  3  shows  the  fluctuation  of  the  annual  burning  rate 
or  loss  cost,  and  also  of  the  annual  rate  of  premium  for  21  years, 
from  1887  to  1907,  inclusive.  The  average  burning  rate  or  loss 
cost  and  the  average  rate  of  premium  for  the  same  period  arc 
also  shown.  The  figures  are  computed  for  the  amount  of  loss  and 
the  amount  of  premium  for  each  $100.00  of  insurance. 

Lower  crooked  line — annual  burning  rate  or  loss  cost. 

Lower  straight  line — average  burning  rate  or  loss  cost. 

Upper  crooked  line — annual  rate  of  premium. 

Upper  straight  line — average  rate  of  premium. 


12 


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PLATE  NO.  4.     WESTERxX   STATE. 

Plate  No.  4  shows  the  fluctuation  of  the  annual  burning,  rate 
or  loss  cost,  and  also  of  the  annual  rate  of  premium  for  21  years, 
from  1887  to  1907,  inclusive.  The  average  burning  rate  or  loss 
cost  and  the  average  rate  of  premium  for  the  same  period  are 
also  shown.  The  figures  are  computed  for  the  amount  of  loss  and 
the  amount  of  premium  for  each  $100.00  of  insurance. 

Lower  crooked  line — annual  burning  rate  or  loss  cost. 

Lower  straight  line — average  burning  rate  or  loss  cost. 

Upper  crooked  line — annual  rate  of  premium. 

Upper  straight  line — average  rate  of  premium. 


13 


And  furthermore,  an  examination  of  these  statistics  shows  us  that 
these  extremes  do  not  generally  occur  close  together  in  point  of 
time.  A  period  of  high  burning  rate  lasts  for  several  years  and  is 
followed  by  several  years  of  low  burning  rate,  or  vice  versa.  This 
becomes  apparent  when  we  compare  the  average  burning  rates  for 
different  five  year  periods.  We  find  in  the  Western  State,  for 
instance,  that  in  1903  the  previous  five  years  show  a  burning  rate  of 
66  cents,  while  in  1908  the  previous  five  years  show  57  cents,  or 
nearly  15  per  cent  lower  (Plate  No.  6).  We  cannot  ignore  such 
fluctuations,  if  we  will,  without  ultimate  harm,  .and  a  schedule  to  be 
adec[uate  and  permanent  must  provide  for  them. 

Previous  Recognition  of  Element  of  Time. 

Pursuing  our  inquiry  further,  we  ask  what  attempt  has  been 
made  in  the  past  to  recognize  these  changes  in  experience  by  proper 
changes  in  rates.  An  examination  of  the  average  rate  for  the 
various  classes  and  states  and  nation  shows  us  beyond  question 
that  rates  have  fluctuated  about  as  much  as  the  amount  of  loss. 
For  the  same  classes  on  which  we  quoted  the  burning  rate  and 
the  same  period  of  years  we  find  the  average  rate  ranging  from 
$1.93  to  $2.54  in  one  case,  and  from  $1.82  to  $2.94  in  the  other. 
In  Wisconsin  the  average  rate  ranged  from  $1.32  to  $1.66  (Plate 
No.  1)  ;  in  Texas,  from  $1.41  to  $1.81  (Plate  Xo.  2)  ;  in  New  York, 
from  52  cents  to  78  cents  (Plate  No.  3)  ;  and  in  the  Western  State, 
from  $1.08  to  $1.24  (Plate  No.  4).  Even  the  average  rate  of  the 
entire  United  States  has  ranged  from  $1.00  to  $1.22  (Plate  No.  5). 
This  is  the  more  remarkable  when  we  remember  that  practically  all  of 
our  former  schedules,  with  the  possible  exception  of  the  Universal, 
have  contained  no  provision  whatsoever  for  such  changes.  We  are 
forced  to  the  conclusion  that  such  changes  are  made  by  arbitrary 
advances  or  decreases,  by  juggling  of  schedules  and  by  application 
of  new  schedules.  Those  of  you  who  have  had  any  experience  in 
going  to  an  assured  with  a  new  schedule  of  charges  will  agree 
with  me  that  the  frequent  change  in  schedules  is  the  cause  of  more 
trouble  and  ill-will  on  the  part  of  the  property  owners  and  the 
general  public  than  any  other  factor  in  our  business.  And  it  is 
expensive  at  the  same  time.  The  average  life  of  schedules  in  the 
past  has  not  been  more  than  five  years.'  Repeatedly  we  find  the 
publication  of  a  schedule  based  upon  preceding  experience  for  a 
period  of  five  or  ten  years.  The  raters  of  the  country  begin  on  the 
stupendous  task  of  applying  this  new  schedule.  At  the  end  of  three 
or  four  years,  when  the  new  schedule  has  been  put  into  general  use, 
ever-changing  experience  necessitates  a  change  in  rates.  The 
schedule  does  not  provide  for  any  change.  A  flat  or  percentage 
change  is  unpopular  and  temporary  at  the  best.  We  are  forced  to 
a  juggling  of  the  schedule  or  to  the  application  of  a  new  |chedule 

14 


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PLATE   NO.   5.     UNITED   STATES. 

Plate  No.  5  shows  the  fluctuation  of  the  annual  burning  rate  or 
loss  ccst,  and  also  of  the  annual  rate  of  premium  for  18  years, 
from  1890  to  1907,  inclusive.  The  average  burning  rate  or  loss 
cost  and  the  average  rate  of  premium  for  the  same  period  are  also 
shown.  The  figures  arc  computed  for  the  amount  of  loss  and  the 
amount  of  premium  for  each  $100.00  of  insurance. 

Lower  crooked  line — annual  l)urning  rate  or  loss  cost. 
Lower  straight  line — average  burning  rate  or  loss  cost. 
Upper  crooked  line — annual  rate  of  premium. 
Upper  straight  line — average  rate  of  premium. 


15 


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PLATE  NO.  6.     WESTERN   STATE. 

5-YEAR  PERIODS. 

Plate  No.  6  shows  the  fluctuation  of  the  average  burning  rate 
or  loss  cost,  and  also  of  the  average  rate  of  premium  for  successive 
five-year  periods,  ending  with  the  years  1899  to  1907,  inclusive.  The 
figures  are  computed  for  the  average  amount  of  loss  and  the  aver- 
age amount  of  premium  for  each  $100.00  of  insurance. 

Lower  line — burning  rate  or  loss  cost. 

Upper  line — rate  of  premium. 


16 


with  all  its  attending  miseries.  To  illustrate:  Milwaukee  was 
first  placed  under  schedule  in  1893.  About  three  years  later  the  old 
State  Board  schedules  were  replaced  by  what  was  called  the  Buffalo 
Mercantile  Schedule.  In  1901,  five  years  later,  the  Union  Mercan- 
tile Schedule  was  applied,  and  in  1906,  five  years  later,  the  Analytic 
System  was  adopted.  The  congested  district  of  Cincinnati  has  been 
rerated  five  times  in  the  last  twelve  years.  In  a  lecture  before  the 
University  of  Chicago,  speaking  of  this  deplorable  condition,  Mr. 
Dean  said : 

"You  doubtless  realize  that  as  a  system  schedule  rating  consists 
of  the  establishing  of  relations  in  hazard ;  that  it  deals  with  a  com- 
plex problem  of  relativity.  Year  after  year  there  is  an  unending 
succession  of  changes  in  the  loss  and  expense  ratio,  which  together 
constitute  the  cost  ratio  of  fire  insurance ;  and  there  is  an  impera- 
tive necessity  that  rates  shall  be  changed  with  some  regard  to  the 
fluctuating  cost  of  the  tiling  sold.  The  present  tariff  system  makes 
no  provision  whatever  for  making  these  changes  in  rates.  It  is 
simply  a  system  of  static  relations.  To  make  rate  changes  it  is 
necessary  to  construct  new  basis  schedules,  which  are  merely  con- 
geries of  untried  suppositive  relations,  and  then  apply  these  schedules 
in  making  hundreds,  perhaps  thousands,  of  local  tariffs.  To  re-rate 
the  entire  country  in  .this  way  is  a  task  of  greater  magnirude  and 
expense  than  that  of  taking  a  national  census. 

"Before  these  new  tariffs  can  be  applied  there  is  almost  sure  to 
be  a  rise  or  fall  in  the  wave  of  annual  loss,  which  makes  the  new 
rates  either  too  low  or  too  high.  There  is  no  assurance  that,  when 
they  become  effective,  the  new  rates  will  fit  existing  conditions  any 
better  than  the  old  rates.  If  too  high,  there  is  a  revolt  on  the  part 
of  the  public,  and  an  immediate  growth  of  mushroom  competition 
which  makes  it  necessary  to  begin  at  once  the  work  of  daubing  the 
new  tariff  with  competitive  rates.  These  competitive  rates,  from 
their  nature,  are  out  of  alignment  with  other  rates,  and  as  they 
multiply,  soon  destroy  all  relativity  as  well  as  all  fairness  in  the 
tariffs.  Again,  high  rates  generate  preferred  classes,  which  are 
greedily  sought  by  companies  willing  to  pay  high  commissions,  and 
this  leads  inevitably  to  a  permanent  increase  in  the  expense  ratio 
which  must  ultimately  be  made  good  by  the  public.  If  rates  are 
temporarily  too  low  on  some  classes,  otiier  classes  must  make  good 
the  deiicit.  If  too  low  on  all  classes,  there  is  an  exodus  of  insurance 
capital,  until,  in  a  panic,  rates  are  sent  skyward  by  a  percentage 
advance  which,  unlike  the  rain,  falls  harder  on  the  righteous  than 
on  the  unrighteous,  for  the  man  who  is  already  paying  the 
highest  rate,  relatively,  must  submit  to  the  largest  increase  under 
the  percentage  advance.  The  result  of  this  is  that  the  house  of  fire 
insurance  is  a  house  undergoing  constant   alterations   and    repairs. 


The  hammer  and  saw  of  the  builder  and  the  pickax  and  shovel  of 
the  wrecker  never  cease  their  din  in  the  process  of  schedule  rating 
and  unrating.  Anything  approaching  order,  system,  or  any  of  their 
synonyms  in  this  turmoil  of  creation  and  destruction  is  out  of  the 
question;  even  in  the  last  resort  of  a  percentage  change,  in  the 
absence  of  any  generally  accepted  definition  of  classes,  it  is  im- 
possible to  describe  what  groups  are  to  be  changed  without  a  long 
sequence  of  explanatory  circulars,  and  circulars  explanatory  of  these 
explanatory  circulars." 

I  have  spent  more  time  than  I  could  well  afford  in  outlining 
the  three  general  factors  that  any  adequate  schedule  must  recog- 
nize, because  I  desire  to  emphasize  the  problem  which  the  author 
of  the  Analytic  System  attempted  to  solve  when  he  conceived  the 
Jirst  ideas  of  his  system.  He  recognized  a  difference  in  the  char- 
acteristics of  each  individual  risk,  such  as  construction,  occupancy, 
protection  and  exposure.  He  recognized  the  difference  in  average 
experience  in  various  states.  He  recognized  the  changing  experi- 
ence from  year  to  year.  In  his  recognition  of  these  factors  he  saw 
the  need  of  a  schedule  or  rating  system  which  would  give  these 
factors  proper  treatment.  We  now  see  the  problem  as  Mr.  Dean 
saw  it.    We  shall  follow  him  in  his  search  for  a  solution, 


18 


THE  SOLUTION  OF  THE  PROBLEM. 


In  any  attempt  to  extricate  himself  from  a  bad  situation  a  man 
naturally  uses  all  of  his  available  resources.  We  have  seen  that 
differences  in  construction,  occupancy,  protection  and  exposure  of 
individual  risks  have  been  well  recognized  in  other  schedules. 
Differences  in  location  have  been  recognized,  but  without  any 
thought  of  uniformity.  The  changing  experience  from  year  to  year 
has  been  the  chief  disturber  and  never  recognized.  Thus  we  have 
only  the  treatment  of  differences  in  construction,  occupancy,  pro- 
tection and  exposure  of  individual  risks  as  the  sum  total  of  our 
available  resources  in  existing  schedules.  Fortunately  we  receive 
more  assistance  from  science,  and  discover  that  several  long  recog- 
nized principles  help  us  materially.  These  principles  need  no  dis- 
cussion here,  as  they  are  among  those  that  are  accepted  and  used 
by  scientists  the  w-orld  over.  We  are  more  vitally  concerned  in 
their  application  to  fire  rating. 

Rate  is  a  Bundle  of  Relations, 

The  first  scientific-  principle  which  we  use  is  stated  thus :  All 
knowledge  is  knowledge  of  relations.  Herbert  Spencer  said :  "The 
analyses  of  vital  action  in  general  lead  us  not  only  to  the  conclusion 
that  things  in  themselves  cannot  be  known  to  us,  but  also  to  the  con- 
clusion that  knowledge  of  ihem,  were  it  possible,  would  be  useless." 
Our  knowledge  of  fire  hazards  is  not  a  knowledge  of  hazards  them- 
selves, but  of  their  relations  to  each  other.  All  rates  are  purely  com- 
parative. What  is  a  rate?  It  is  a  numerical  expression  of  the  relative 
amount  of  fire  hazard  in  the  risk  to  which  it  applies.  All  the 
charges  that  enter  into  the  make-up  of  a  rate  are  numerical  expres- 
sions of  the  relative  amounts  of  fire  hazard  in  those  features  of 
the  risk  to  whicii  ihey  specifically  apply.  Hence  a  rate  is  a  bundle 
of  relations.     Mr.  Dean  has  said : 

"Fire  underwriting  is  a  business  transacted  upon  averages.  Fire 
hazard  as  a  whole  is  a  compound,  not  of  dissociated,  but  of  related 
parts,  and  each  part  is  as  amenable  to  the  law  of  averages  as  the 
total  composed  of  all  these  parts.  If,  under  the  law  of  ave.-agcs,  a 
thousand  buildings  of  given  construction,  occupancy  and  protection 
will  show  a  given  ratio  of  loss  to  value  during  a  given  period, 
under  the  same  law  a  thousand  flues,  hatchways,  skylights,  well- 
holes,  wooden  ceilings  or  other  parts  of  the  building  of  given  con- 
struction will  each  contribute  its  unvarying  quota  of  this  ratio. 
Hence   the   several   parts   stand    in   a   position   of    unchanging  rela- 

19 


tivity,  not  only  to  the  whole,  but  to  each  other.     Fire  hazard  is  by 
nature  a  network  of  relativity." 

Our  second  scientific  principle  states  that  when  we  examine 
into  the  character  of  relations  we  find  them  to  be  of  two  kinds, 
relations  of  quality  and  relations  of  quantity.  In  the  application 
of  this  principle  to  fire  rating  we  learn  that  we  are  not  concerned 
with  the  quality  of  fire  hazard;  that  all  relations  of  fire  hazard  are 
relations  of  quantity. 

Co-existent  and   Sequential   Relations. 

Again,  science  states  that  all  relations  of  quantity  are  either  co- 
existent or  sequential.  Differences  in  quantity  may  exist  at  the 
same  time  or  at  dift'erent  times.  Our  analysis  of  fire  hazard  teaches 
that  the  relations  of  fire  hazard  are  both  co-existent  and  sequential. 
Under  coexistent  relations  we  place  the  first  two  of  our  three  gen- 
eral classes  of  hazard — i.e.,  those  differences  in  hazard  which  exist 
and  are  recognized  today  among  risks  and  among  different  states. 
Under  sequential  relations  we  place  the  third  general  class — i.e., 
those  differences  as  shown  by  our  changing  experience  from  j'ear 
to  year. 

Measurement    Involves    Use    of    Empirical    Standard. 

For  the  fourth  time  science  comes  to  our  aid  and  states  that 
any  measurement  of  quantity  involves  a  standard.  No  difference  in 
quantity  can  be  expressed  except  in  terms  of  some  standard.  Dif- 
ference in  weight  can  be  expressed  only  in  pounds  and  ounces. 
Differences  in  distance  can  be  expressed  only  in  feet  or  miles. 
Thus  we  see,  if  we  are  to  measure  these  amounts  of  fire  hazard, 
we  must  have  a  standard  to  measure  by. 

Finally  science  states  that  all  standards  are  empirical  and  must 
be  the  same  wherever  used.  Otherwise  they  become  standards  no 
longer.  Turning  to  fire  rating,  we  conclude  that  the  standards  we 
arc  to  measure  by  must  be  empirical,  like  other  standards,  and  must 
be  the  same  wherever  used.  In  a  recent  large  meeting  of  insurance 
men  the  idea  was  conveyed  that  a  uniform  classification  was  a 
necessary  precedent  of  a  uniform  schedule.  A  study  of  Mr.  Dean's 
writings  and  of  the  Analytic  System  does  not  support  this  idea. 
We  quote  from  an  anonymous  writer  as  follows : 

"A  widespread  misconception  seems  to  exist  in  the  belief  that 
a  really  scientific  basis  schedule  can  never  be  constructed  until  we 
have  accumulated  the  data  from  the  combined  statistics  of  our  class- 
ified experience.  This  misconception  has  been  enunciated  so  often, 
so  long,  by  authorities  so  high,  that  the  truth  needs  to  be  known. 
The  value  of  our  classified  statistics  in  the  construction  of  the  so- 
called  scientific  schedule  are  not  only  practically  nil,  but  as  pre- 
liminary data  they  are  unnecessary.  On  the  contrary,  the  establish- 
ment  of  our  coexistent  relations — i.  e.,  rate  estimates — on  a  basis 

20 


of  logical  and  permanent  relativity  is  a  condition  precedent  to  the 
treating  of  reliable  classifications  of  our  annual  experience.  In 
other  words,  logical  estimates  which  maintain  a  permanent  rela- 
tivity are  the  raw  material  out  of  which,  from  year  to  year,  we  can, 
through  classification,  raise  or  lower  our  selling  prices  with  intelli- 
gence. The  reason  for  this  is  plain  and  inexorable.  In  construct- 
ing a  tariff  we  arc  compelled  to  deal  with  parts  of  risks,  and  parts 
of  risks  arc,  and  probably  always  will  be,  ignored  in  our  classified 
statistics  of  annual  experience.  \Vc  do  not  keep  a  record  of  our 
annual  experience  with  deficient  walls,  vertical  openings,  wooden 
cornices,  area,  flues,  etc.,  because  these  things  are  not  amenable  to 
statistical  treatment.  We  know  that  each  of  these  parts  constitutes 
a  recognized  factor  in  the  hazard  of  risks  as  wholes,  and  rightly 
assume  that  each  factor  is  as  amenable  to  average  as  the  risk  units 
themselves,  but  we  cannot,  in  the  nature  of  things,  observe  or  de- 
termine their  relative  contribution  to  the  total  as  manifested  in  the 
risk-units.  We  can  establish  charges  for  them  by  observation,  com- 
parison, conference  and  a  reasonable  consensus.  We  know  that  a 
charge  for  a  given  factor  that  is  unreasonably  large  will  not  hold 
against  competition.  We  know  that  if  unreasonably  small,  ex- 
perience or  common  sense  will  soon  right  it.  In  fine,  we  establish 
these  charges  by  our  best  collective  judgment,  under  the  well  known 
mathematical  principle  known  as  the  law  of  error." 

Rating  Schedule   to   be   a   Standard. 

Our  schedule  for  making  rates  is  to  be  an  empirical  standard 
of  measurement,  which  can  be  used  in  the  making  of  rates  at  any 
desired  level,  just  as  a  yardstick  can  be  used  in  measuring  a  pole 
100  feet  high  as  well  as  one  25  feet  high.  In  establishing  our 
schedule  as  an  empirical  standard  we  are  not  violating  any  scien- 
tific precept.  All  standards  are  empirical.  The  standard  meter  of 
the  metric  system  is  the  length  of  a  metal  bar  at  32  degrees  tem- 
perature kept  at  Paris.  This  bar  was  originally  intended  to  be  one 
ten-millionth  of  the  circumference  of  the  earth,  but  subsequent 
scientific  measurements  have  shown  that  it  is  not.  It  is  therefore 
kept  as  an  arbitrary  or  empirical  standard.  This  empirical  standard 
which  we  are  to  use  as  a  schedule  is  making  fire  rates  must  be  the 
same  wherever  used.  Webster  defines  a  standard  as  "that  whicli 
is  established  by  autlwiity  as  a  rule  or  measure  of  quantity."  That 
which  is  established  by  authority  cannot  be  altered  except  by  the 
same  authority  that  established  it.  All  measurements  of  distance 
would  immediately  become  worthless  if  we  measured  some  distances 
with  a  yardstick  36  inches  long  and  the  rest  with  a  yardstick  30 
inches  long.  Its  unchangeablencss  is  what  makes  it  a  standard. 
Our  schedule,  if  it  is  to  be  a  standard,  must  be  the  same  wherever 
used.    The  same  anonymous  writer  expresses  it  thus : 

21 


"If  the  several  parts  of  hazard  found  in  risk-units  are  bound 
together  in  an  unchanging  body  of  relativity  we  cannot  consistently 
or  intelligently  apply  tariffs  which  permit  scores,  and  even  hun- 
dreds, of  different  bodies  of  relativity  arbitrarily  established  here, 
there  and  everywhere,  without  a  single  guiding  principle.  Ad- 
mitting the  absence  of  statistical  data  for  the  establishment  of 
charges  does  not  change  the  fact  that  there  is  an  unchanging  body 
of  relations  to  establish  and  maintain,  and  that  this  involves  a  task 
worthy  of  our  best  underwriting  thought." 

Mr.  C.  H.  Patton,  of  Cleveland,  Ohio,  in  his  talk  before  the 
1908  meeting  of  the  Underwriters'  Association  of  the  Northwest, 
said : 

"By  no  means  should  a  rater  undertake  to  mollify  an  estab- 
lished schedule  to  meet  individual  grievances.  The  moment  a  single 
risk  is  thus  given  an  advantage  over  others,  that  moment  the  value 
of  the  schedule  is  thrown  away.  If  an  error  is  made  in  framing  a 
rate,  it  should  without  hesitancy  be  corrected.  Under  no  circum- 
stances, however,  can  a  rater  afford  to  discriminate  by  favoring  in- 
surers or  agents  who  may  be  a  little  stronger  than  others  in  their 
complaints  or  arguments." 

Although  this  use  of  the  schedule  as  an  unchangeable  standard 
has  been  the  working  policy  of  the  west  for  the  last  three  years,  the 
principle  has  not  yet  asserted  itself  completely.  I  was  surprised 
the  other  day  to  hear  a  prominent  Chicago  underwriter,  in  speaking 
of  the  application  of  the  Analytic  System  to  a  large  western  city  (not 
Chicago),  say,  that  he  had  openly  advocated  the  re-rating  of  that  city 
under  the  Analytic  System,  but  with  such  changes  in  the  system  as 
the  local  agents  wished  to  make.  Any  person  that  desires  the  Ana- 
lytic System  to  be  a  permanent  and  adequate  schedule  much  prefers 
that  it  be  not  applied  at  all  than  applied  in  a  modified  form.  Such  a 
changing  of  past  schedules  in  every  case  has  finally  killed  them. 
Let  us  keep  the  Analytic  System  free  from  this  defect  or  we  will 
find  it  as  useless  as  the  yardstick  that  is  36  inches  long  today  and 
30  inches  long  tomorrow.  The  Analytic  System,  therefore,  is 
founded  on  the  belief  that  the  analysis  of  fire  hazard  involves  a 
measurement  of  those  relations  both  coexistent  and  sequential, 
Zihich  comprise  our  knowledge  of  fire  hazard,  by  a  standard  zvluch 
must  necessarily  be  empirical  and  which  must  he  applied  zvithout 
change  to  all  degrees  of  hazard  now  existing  or  possible  to  exist. 
Let  us  see  how  these  principles  have  been  worked  into  a  rating 
system. 

Application  of  Principles. 

Our  rates  must  cover  the  hazards  of  construction,  occupancy, 
protection  and  exposure,  the  different  experience  in  different  parts 
of   the   country   and   the  changing   experience   from   year   to  year. 

22 


Some  of  these  factors,  such  as  hazards  of  construction,  occupany, 
protection  and  exposure,  are  subject  to  analysis  and  can  be  cov- 
ered by  specific  cliarges  made  to  conform  to  the  best  underwriting 
judgment  that  can  be  secured.  Other  factors,  such  as  the  different 
experience  in  different  parts  of  the  country  and  the  changing  ex- 
perience from  year  to  year,  are  not  subject  to  analysis.  These  must 
be  lumped  in  one  sum,  which  we  call  the  basis  rate.  We  thus  have 
constructed  a  working  definition  of  that  mysterious  something 
which  we  have  called  the  basis  rate  and  used  for  so  many  years 
without  any  clear  understanding  of  what  it  w^as.  Whether  or  not 
we  can  analyze  these  factors,  however,  we  must  maintain  constant 
ratios  among  all  of  them.  Our  rates  are  bundles  of  constant  rela- 
tions.    In  the  preface  of  the  Analytic  System  we  read : 

"In  constructing  a  basis  schedule  we  necessarily  select  certain 
features  of  hazard  as  separable,  and  attach  to  each  of  these  a 
charge,  while  to  the  residue,  consisting  of  unanalyzed  parts,  we 
attach  a  lump  charge  and  call  it  a  basis  rate.  There  is  no  intrinsic 
difference  between  the  charge  we  call  a  basis  rate  and  the  other 
charges,  excepting  that  it  includes  all  things  too  obscure,  indefinite 
or  unimportant  to  schedule.  If  under  the  law  of  averages  the  rela- 
tivity between  the  whole  and  its  parts  does  not  change,  and  the  rela- 
tivity among  the  several  parts  themselves  is  constant,  it  follows 
that  each  charge  bears  an  unvarying  relation  to  the  basis  rate,  or, 
conversely,  the  basis  rate  a  constant  relation  to  the  other  charges. 
This  being  the  case,  it  is  false  logic  to  treat  the  basis  rate  or  any 
of  the  charges  as  a  dissociated  element  of  hazard,  for  every  change 
in  basis  rate  or  charge  involves  a  disturbance  of  their  mutual  rela- 
tivity. The  real  question  in  establishing  evyy  charge  is.  What  ratio 
of  the  total  loss  will  this  feature  of  hazard  under  the  law  o^ 
average  probably  contribute?  When  this  ratio  has  been  established 
by  judgment  and  experience  it  should  take  its  place  in  every  schedule 
as  a  fixed  ratio,  bearing  a  constant  relation  to  the  whole  and  its 
several  parts.  This  end  may  be  reached  by  making  all  charges 
percentages  of  some  common  standard  and  the  natural,  in  fact, 
only  possible,  standard  for  this  purpose  is  the  basis  rate,  because 
it  enters  into  every  rate,  while  other  charges  do  not." 

Reason   for   Percentage   Charges. 

If  the  consensus  of  underwriting  judgment  and  experience  de- 
cides that  the  charge  for  a  stovepipe  through  a  roof  should  be  two 
times  the  charge  for  a  brick  chimney  on  brackets,  this  relation 
should  be  the  same  in  a  building  with  protection  and  a  building 
without  protection,  in  a  building  in  Texas  and  a  building  in  New 
York,  in  a  building  today  and  a  building  next  year,  when  rates  may 
have  been  put  up  or  down  to  provide  for  changing  experience. 
If  the  consensus  of  underwriting  judgment  decides  that  the  charge 

23 


for  a  stovepipe  through  a  roof  should  bear  a  certain  relation  to  the 
charge  for  the  unanalyzcd  hazard,  namely,  the  basis  rate,  this  rela- 
tion should  be  the  same  in  buildings  with  and  without  protection,  in 
Texas  and  New  York,  this  year  and  next  year.  Obviously,  the  only 
way  to  keep  constant  these  relations  of  unanalyzed  and  analyzed 
hazard  is  to  make  the  charges  for  them  percentages,  and  always  to 
use  these  same  percentages  wherever  the  hazards  which  they  cover 
are  found.  The  only  hazard  that  is  common  to  all  risks  is  the  un- 
analyzed hazard,  and  therefore  the  only  "charge"  that  is  found  in 
all  risks  is  the  basis  rate.  For  this  reason  the  charges  for  analyzed 
hazard  are  made  percentages  of  the  basis  rate,  and  we  are  thus 
enabled  to  maintain  constant  relations  among  individual  charges 
and  between  any  individual  charge  and  the  basis  rate.  When  the 
difference  in  experience  in  two  states  calls  for  different  estimates 
in  those  states  we  can  then  assume  different  basis  rates,  and  know 
that  the  same  relation  existing  between  the  two  basis  rates  exists 
between  the  final  estimates  on  similar  risks  in  the  two  states  and 
also  between  the  various  charges  for  similar  defects  in  each  risk. 
Also  when  the  difference  in  experience  from  year  to  year  calls  for 
a  change  in  estimate,  we  can  change  the  basis  rate  and  be  sure  that 
the  same  relations  will  continue  to  exist. 

Percentage  Charges  Illustrated. 

As  this  point  is  the  pith  of  the  whole  matter  and  should  be 
most  clearly  understood,  I  will  illustrate :  Assume  the  basis  rate 
for  all  brick  buildings  in  the  year  1908,  one  story  high  and  without 
protection,  to  be  80  cents.  In  1913,  five  years  later,  assume  the 
basis  rate  for  the  same  class  of  building  will  be  60  cents,  which  is 
20  cents  or  25  per  cent  lower  than  the  basis  in  1908.  Assume  a 
stovepipe  through  the  roof,  for  which  the  charge  is  15  per  cent. 
In  1908  the  charge  is  15  per  cent  of  80  cents,  or  12  cents.  In  1913 
the  charge  will  be  15  per  cent  of  60  cents,  or  9  cents;  9  cents  is  3 
cents,  or  25  per  cent,  less  than  12  cents.  We  thus  have  the  same 
relation  between  the  two  stovepipe  charges  that  we  have  between 
the  two  basis  rates.  Also  assume  an  occupancy  charge  of  45  per 
cent.  In  1908  the  charge  is  45  per  cent  of  80  cents,  or  36  cents. 
In  1913  the  charge  will  be  45  per  cent  of  60  cents,  or  27  cents; 
27  cents  is  9  cents,  or  25  per  cent,  less  than  36  cents.  We  thus 
have  the  same  relation  between  the  two  occupancy  charges  that  we 
have  between  the  two  basis  rates.  Also  please  observe  that  the 
charge  for  the  assumed  occupancy  is  three  times  the  charge  for  the 
stovepipe  in  1908,  as  well  as  in  1913;  36  cents  is  3  times  12  cents; 
27  cents  is  3  times  9  cents.  If  we  now  assume  that  this  defect  and 
this  occupancy  are  all  that  can  be  charged,  we  figure  total  charges  of 
15  per  cent  plus  45  per  cent,  or  60  per  cent.  In  1908  the  final  estimate 
on  the  building  is  60  per  cent  of  80  cents,  or  48  cents,  plus  80  cents, 

24 


wliich  gives  $1.28.  In  1913  the  final  estimate  will  be  60  per  cent  of  60 
cents,  or  36  cents,  plus  60  cents,  which  gives  96  cents ;  96  cents  is  32 
cents  or  25  per  cent,  less  than  $1.28.  We  thus  have  the  same  re- 
lation between  the  two  final  estimates  that  we  have  between  the 
two  basis  rates,  or  between  the  two  occupancy  charges,  or  between 
the  two  stovepipe  charges ;  and  furthermore,  the  basis  rate,  stovepipe 
charge,  occupancy  charge  and  tinal  estimate  in  1908  bear  the  same 
relation  to  each  other  that  they  will  in  1913.  If  the  occupancy  is 
three  times  as  hazardous  as  the  stovepipe  in  1908,  it  will  l)c  three 
times  as  hazardous  in  1913,  and  we  have  it  charged  so.  Thus  by  a 
difference  in  basis  rates,  we  are  able  to  bring  about  any  desired 
difference  in  final  estimate  due  to  a  difference  in  experience,  with- 
out changing  the  relations  among  the  various  charges  for  hazards 
that  can  be  or  cannot  be  analyzed.  Again,  quoting  from  the  preface 
of  the  Analytic  System,  we  read : 

"A  tariff  constructed  of  fixed  charges  and  credits — in  other 
words,  a  tariff  in  which  the  principle  of  relativity  is  not  recognized — 
must,  of  necessity,  be  an  unstable  compound  of  unrelated  parts. 
It  cannont  be  expected  to  serve  its  purpose  for  any  length  of  time, 
because  every  important  change  in  loss  ratios,  which  are  always 
changing,  necessitates  i;s  reconstruction  or  abandonment  through  a 
percentage  advance  or  reduction  which,  applied  as  it  is,  to  rates  out 
of  relation  to  each  other,  breeds  trouble. 

"A  tariff  built  upon  the  cornerstone  of  relativity  when  once 
established  becomes  an  organic  whole — an  instrumentality  of  log- 
ically related  parts  which  no  future  exigencies  of  the  business  need 
ever  disturb.  It  becomes  a  permanent  instrument  for  measuring 
bazard,  and  while  it  is  conceivable,  even  probable,  that  a  new  tariff 
so  constructed  may  require  a  period  of  adjustment  to  develop  con- 
sistency in  all  its  parts,  when  this  consistency  has  been  finally 
established  to  conform  to  the  best  underwriting  judgment,  it  be- 
comes a  finished  structure,  a  permanent  body  of  relations  'for  the 
measurement  of  fire  hazard.  While  it  may  become  necessary  from 
time  to  time  to  insert  some  new  charge  or  credit  to  fit  an  innova- 
tion in  hazard,  aside  from  this  necessity  it  is  safe  to  assume  that, 
once  completed,  it  will  be  as  unnecessary  to  rebuild  a  tariff  so  con- 
structed as  it  is  to  rebuild  the  compass,  chronometer  or  ther- 
mometer." 

State  Differences. 

This  fact,  that  the  final  estimates  are  made  up  of  constantly  re- 
lated basis  rates  and  charges,  also  enables  us  to  judge  of  the  dif- 
ference in  rates  in  various  states,  or  at  different  times.  If  for  any 
reason  we  find  it  necessary  to  use  different  basis  rates  in  two  states, 
we  know  how  much  difference  exists  in  the  rates  in  the  two  states. 
By  difference  in  rates  I  do  not  mean  the  actual  difference  in  average 

25 


rate.  This  could  be  obtained  only  by  taking  an  average  of  all  the 
rates  in  each  state,  and  then  would  mean  nothing  unless  we  knew 
the  differences  in  the  schedules  as  used  to  bring  about  the  differ- 
ences in  rates.  By  differences  in  rates  I  mean  the  average  differ- 
ence which  would  exist  were  the  risks  of  the  two  states  similar  in 
construction,  occupancy,  public  and  private  protection  and  exposure. 
As  an  illustration  compare  Illinois  and  Tennessee.  These  two 
states  have  been  rated  by  the  Analytic  System.  It  was  found  that 
the  use  of  a  brick  basis  rate  of  60  cents  in  Illinois  and  of  85  cents 
in  Tennessee  gave  the  desired  results.  This  was  not  due  to  a 
difference  in  construction,  occupancy,  etc.,  in  the  two  states,  but  to 
a  difference  in  experience  even  were  these  hazards  identical.  We 
thus  know  accurately  the  relation  existing  between  the  rates  in 
Illinois  and  Tennessee.  Should  any  change  in  experience  justify  a 
change  in  rates,  we  can  take  intelligent  action.  With  the  applica- 
tion of  such  a  system  to  various  states  and  cities  the  companies 
can  tell  accurately  where  rates  are  low  and  where  rates  are  high, 
and  when  a  change  in  rates  becomes  necessary,  the  problem  can  be 
approached  in  a  systematic  and  intelligent  way.  As  Mr.  Dean  says : 
"The  system  possesses  the  novel  and  invaluable  feature  of  recording 
accurately  every  departure  from  an  established  norm  of  relativity, 
which  makes  it  possible  to  determine  by  comparison  every  inequality 
made  necessary  by  the  exigencies  of  the  business  and  reveals  with 
precision  what  is  necessary  to  restore  a  proper  relativity." 

Schedule   a   Process  of   Evolution. 

We  arc  now  in  a  position  to  realize  that  the  construction  of 
the  schedule  is  a  process  of  evolution.  If  our  theories  are  right  we 
have  only  to  adjust  our  detailed  charges  to  a  point  where  they  will 
embody  the  consensus  of  underwriting  judgment  and  give  the 
service  that  we  require  of  them.  In  "Fire  Rating  as  a  Science"  we 
read : 

"Charges  and  credits  are  necessarily  provisional  assumptions. 
The  most  we  can  claim  for  them  is  that  they  arc  based  upon  united 
judgment  and  experience,  through  which  alone  approximate  truth 
can  be  estimated.  While  even  this  claim  will  admit  of  debate  (for 
they  have  always  been  the  source  of  much  controversy),  there  is 
no  disputing  the  fact  that  these  specific  charges  and  credits  have 
in  them  the  element  of  abstract  fairness.  Applying  to  features 
common,  perhaps,  to  all  the  risks  of  a  class,  or  to  a  large  proportion 
of  the  risks  of  many  classes,  they  are  free  from  the  possibilities  of 
personal  favoritism.  It  is  proper  to  assume  that  as  many  of  these 
elementary  factors  will  be  too  low  as  too  high,  and  when  a  risk  is 
unduly  taxed  in  one  charge  it  is  reasonably  sure  to  be  insufficiently 
taxed  in  another.     Under  these  leveling  influences  it  is  safe  to  as- 

26 


sumc  that  each  charge  is  automatically  regulated  within  the  limits 
not  far  from  the  true  mean." 

When  we  have  studied  the  subject  thus  far,  we  see  clearly  de- 
fined before  us  these  fundamental  ideas :  Any  rating  system  to  be 
permanently  adequate  must  recognize  and  charge,  first,  for  the 
individual  features  of  a  risk,  such  as  construction,  occupancy,  pro- 
tection and  exposure;  second,  for  a  different  experience  in  different 
localities ;  and  third,  for  a  changing  experience  from  year  to  year. 
The  Analytic  System  recognizes  and  charges  for  these  three  factors 
by  the  assumption  that  these  factors  are  constantly  related  to  each 
other  and  that  a  rating  system  should  be  regarded  merely  as  a 
standard  of  measurement,  composed  of  fixed  charges  for  these 
relations. 

With  this  explanation  we  are  finished  with  the  philosophy  of 
the  Analytic  System.  It  is  now  apparent  that  the  papers  to  follow 
will  be  merely  an  investigation  of  these  arbitrary  charges  and 
credits,  of  these  provisional  assumptions.  In  the  later  papers  we 
shall  attempt  to  secure  a  working  knowledge  of  the  schedule. 
To-night,  however,  we  have  considered  only  the  fundamental  truths 
of-  theory  and  practice  which  are  the  foundations  upon  which  the 
entire  schedule  rests.  We  have  attempted  to  bring  these  out  so 
clearly  and  so  undistorted  by  details  that  they  may  secure  perma- 
nent lodgment  in  cn.ir  minds  and  remain  there  as  a  background 
throughout  our  future  study. 


27 


Methods 

OF 

Operation 


OF  THE 


Analytic  System 


January  26,  1909 
February  23,  1909 


CONSTRUCTION  AND  OCCUPANCY. 

January  26,    1909. 

Before  entering  upon  the  snl)ject  of  the  evening  I  wish  to 
recall  the  points  included  in  our  first  paper  on  the  Analytic  System. 
We  dealt  then  with  the  principles  and  philosophy  of  the  System.  It 
was  seen  that  there  were  three  general  classes  of  hazard  to  be 
recognized  by  any  rating  schedule  which  was  to  be  permanent.  The 
first  class,  those  hazards  inherent  in  or  about  the  building  itself, 
such  as  construction,  occupancy,  public  and  private  protection  and 
exposure,  has  been  fairly  adequately  taken  care  of  in  schedules 
preceding  the  Analytic  System.  The  second  class,  which  we  might 
call  the  element  of  place,  and  whicli  had  to  do  with  the  different 
amount  of  losses  on  the  same  classes  of  risk  in  different  localities, 
has  been  very  little  recognized.  The  third  class,  which  we  might 
call  the  element  of  time,  covering  the  changing  experience  from 
year  to  year,  has  not  been  recognized  at  all.  All  of  our  previous 
schedules  have  been  inflexible.  We  saw  that  experience  does  differ 
in  different  states  or  part  of  states,  that  losses  in  Tennessee,  for 
instance,  are  higher  than  lo.^ses  in  Illinois.  We  saw  that  experience 
changes  from  year  to  year  as  is  evidenced  by  the  changing  amount 
of  annual  loss  in  a  given  clas?,  in  a  given  state,  or  in  the  United 
States  as  a  whole. 

Certain  principles  were  pointed  out  which  the  Analytic  System 
proposed  to  use  in  adequately  measuring  these  various  classes  of 
hazard.  Rates  were  described  as  bundles  of  quantitative  relations 
to  be  measured  by  an  empirical  standard  which  could  be  applied 
without  change  to  all  classes  of  risks  in  all  places  and  at  all  times, 
just  as  a  yard  stick  could  be  used  to  measure  the  height  of  a  pole 
25  feet  high  as  well  as  one  100  feet  high.  Percentage  charges  of 
an  empirical  basis  rate  were  shown  to  be  the  means  whereby  an 
adequate  measurement  could  be  made  of  these  different  and  vary- 
ing features  or  elements  of  hazard.  And  a  desired  change  in  basis 
rate  was  shown  to  produce  the  desired  change  in  final  rate  as  called 
for  by  the  different  experience  in  various  places  and  at  various 
times,  without  altering  to  the  slightest  degree  the  relation  existing 
between    charges    themselves    which   entered    into   the   make-up   of 

31 


the  rate,  between  these  charges  and  the  final   rate  or  between  the 
basis  and  final  rate. 

An  adequate  system  of  measurement  for  the  elements  of  place 
and  time  was  thus  provided  and  we  had  left  only  the  proper  ad- 
justment of  the  detailed  percentage  charges  to  cover  the  first  gen- 
eral class  of  hazard;  i.  e.,  that  which  had  to  do  with  the  building 
itself,  such  as  construction,  occupancy,  public  and  private  protection 
and  exposure.  The  securing  of  adequate  statistical  data  to  deter- 
mine the  proper  amounts  of  these  percentage  charges,  such  as  those 
for  chimneys,  walls,  etc.,  was  shown  to  be  not  only  impractical  on 
account  of  the  large  expense  involved,  but  also  impossible  as  far 
as  some  of  these  charges  arc  concerned.  It  would  take  more  than 
human  genius  to  devise  statistics  that  would  show  what  part  of 
the  total  hazard  of  a  risk  was  due  to  deficient  wall  thickness  or 
floor  openings.  Fortunately  such  data  is  not  necessary  since  the 
charges  can  be  selected  by  the  concensus  of  the  best  underwriting 
judgment  obtainable  and  the  law  of  average  makes  the  amount  of 
error  very  small,  as  it  is  probable  that  charges  too  high  would  be 
as  many  as,  and  offset  by  charges  too  low.  Competition  and  under- 
.  writing  selection  would  also  tend  to  lower  charges  too  high  and 
increase  charges  too  low. 

We  arc  to  investigate  the  methods  of  the  Analytic  System  in 
dealing  with  these  detailed  hazards.  We  wish  to  investigate  the 
internal  structure  of  the  schedule,  to  find  out  how  these  charges 
are  made,  so  that  when  we  see  and  recognize  any  feature  of  a 
building,  its  occupancy,  its  protection  or  its  exposure  as  having  a 
tendency  to  increase  or  decrease  the  danger  from  fire,  we  may  be 
able  to  select  from  the  schedule  the  percentage  charge  or  credit 
which  covers  that  feature.  And  then  we  shall  see  how  the  schedule 
combines  these  charges  and  credits  to  produce  the  final  figure  which 
it  names  as  the  relative  estimate,  in  cents  per  $100.00  insurance, 
of  the  amount  of  hazard  in  that  building  and  contents. 

All  the  hazards  in  or  abnut  a  building  group  themselves  under 
four  general  heads :  construction,  occupancy,  public  and  private  pro- 
tection, and  exposure.  These  classes  include  all  the  features  of  fire, 
hazard  which  we  care  to  analyze.  There  is  no  feature  which  is 
liable  to  start,  increase  or  stop  fire  which  cannot  be  placed  under 
one  of  these  heads.  Moral  hazard  we  do  not  attempt  to  analyze. 
We  shall  deal  tonight  with  the  first  two  classes,  construction  and 
occupancy,  leaving  protection  and  exposure  for  the  third  paper. 
We  shall  learn  how  to  rate  a  building  and  its  contents  standing  so 
entirely  by  itself  that  there  is  no  danger  of  its  catching  fire  from 
any  other  building,  and  also  without  fire  protection,  public  or  private. 

32 


CONSTRUCTION. 

Remembering  thai  the  Analytic  System  deals  only  with  mercan- 
tile classes,  and  even  then  does  not  include  fireproof  or  sprinklered 
risks,  we  find  two  basis  rates  provided  for  any  one  locality.  Brick, 
stone  and  concrete  buildings  take  what  wc  call  for  convenience,  the 
"brick"  basis  rate.  Frame,  iron-sheathed  frame,  skeleton  iron-clad 
and  brick-veneered  buildings  take  the  other,  or  "frame"  basis  rate. 
There  is  no  uniform  relation  between  these  two  basis  rates,  both 
being  empirical,  and  differing  in  the  various  states.  You  will  notice 
that  a  comparatively  new  type  of  construction,  namely,  hollow- 
cehient-block  or  artificial  stone,  with  which  also  is  classed  tile,  is 
not  includct!  in  the  above  classification  of  buildings.  The  schedule 
provides  for  the  use  of  a  basis  rate  on  this  class  25  per  cent,  higher 
than  the  brick  basis,  such  as  75  cents  where  the  brick  basis  is  60 
cents. 

The  various  features  in  the  construction  of  a  building,  with 
the  exception  of  wall  construction  covered  by  the  above  difference 
in  basis  rates,  arc  classed  by  the  schedule  under  the  following 
heads:  Height,  Area.  Walls,  Roof,  Ceiling,  Skylights,  Openings 
through  floors.  Partitions,  Chimneys,  Flues  and  Stovepipes.  Ex- 
terior attachments.  Warerooms  or  additions.  Superior  construction 
and  Objectionable  conditions.  We  shall  consider  these  as  briefly  as 
possible  in  the  order  named. 

Height. 

The  one-story  building  is  assumed  as  a  standard  and  the  basis 
rate  is  increased  for  each  story  over  one.  The  amount  of  this 
increase  is  figured  by  a  formula  which  gives  greater  amounts  for 
each  succeeding  higher  story  initil  the  hei.aht  is  reached  where  the 
fire  protection  is  regarded  as  ineffective,  when  the  amount  of  in- 
crease becomes  the  same  for  each  additional  story.  This  manner  of 
charging  for  height  is  really  a  percentage  charge  of  the  basis  rate 
of  a  one-story  building  added  to  that  basis  rate  and  used  as  a  new 
basis  rate.  Thus  the  charge  for  height  is  distributed  over  all  the 
hazards  of  construction  and  occupancy  (as  it  should  be"),  sinte  the 
charges  for  these  hazards  are  increased  l)y  reason  of  their  being 
percentages  of  a  higher  figure.  Absence  of  basement  is  recognized 
by  a  deduction  from  the  basis  rate.  Each  sub-basement  is  charged 
for  by  the  addition  to  the  basis  rate  of  an  amount  equal  to  the 
deduction  for  no  basement.  !  give  example  of  basis  rates  without 
fire  protection,  as  follows : 

33 


Basis  Rates. 

Brick.       Frame. 

One  story   $0.60  $0.95 

Two   stories    63  1.00 

Three    stories    66  1.06 

Four    stories    70  1.17 

Five   stories    T^ 

Increase  for  each  additional  story 07 

Decrease  if  no  basement 03 

Area. 

The  area  of  1,000  square  feet  for  a  one-story  Iniilding  is 
assumed  as  a  standard  and  any  floor  area  over  this  standard  is 
charged  for  by  a  series  of  percentages  of  the  basis  rate.  These 
charges  are  not  added  to  the  basis  rate  and  used  as  a  new  one 
as  in  the  case  of  the  charges  for  height,  but  are  merely  added  to 
the  other  percentage  charges  for  walls,  roofs,  occupancy,  etc.,  to 
give  the  total  percentage  charge  for  deficiencies  and  occupancy. 
"Theoretically  basis  rates  should  be  established  upon  the  dimensions 
of  buildings,  including  area  as  well  as  height,  but  this  would  cause 
wider  extremes  between  the  rates  of  small  area  and  large  area 
risks  than  public  opinion  or  even  underwriting  judgment  would  at 
present  sanction."  There  is  nothing  to  prevent,  however,  the  charg- 
ing for  area  in  the  same  manner  as  for  height,  should  it  be  so 
decided  later.  These  area  charges  are  increased  for  shingle,  un- 
approved composition  or  frame  mansard  roof,  and  are  decreased 
for  certain  non-hazardous  occupancies,  and  for  division  walls  with 
openings  or  extending  only  to  roof.  I  give  a  section  of  this  area 
table  as  applying  to  all  buildings: 

Area  Table. 
Square  feet  of  One 

ground  floor  area.  floor. 

1.000 

2,000 2% 

3.000 - 3% 

4.000., 4% 

5,000 5% 

6,000 6% 

7.000 1% 

8,000 8% 

Walls. 
In  the  case  of  buildings   rated   under  the  brick  tariff  and   for 
which   the  brick   basis   rate   is   used,   proper   percentage   charges   are 
made  for  deficiencies  in  thickness  from  an  established  standard  for 

34 


Fwo 

Three 

Four 

oors. 

floors. 

floors. 

2% 

3% 

3% 

4% 

5% 

7% 

6% 

8% 

10% 

§% 

11% 

14% 

10% 

14% 

17% 

11% 

16% 

20% 

13% 

19% 

24% 

15% 

22% 

27% 

brick,  stone,  concrete,  hollow-cement  block  or  tile  walls.  The  charge 
is  1  per  coin,  for  each  iiicli  of  average  deficiency.  Standard  thick- 
nesses are  given  for  party  walls  dividing  two  buildings,  for  in- 
dependent or  exterior  walls,  supporting  and  non-supporting  walls, 
wails  ledged  and  not  Icdgcd,  w-alls  braced  with  pilasters  and  walls 
of  pier  construction.  A  difference  in  standard  is  also  made  accord- 
ing to  the  character  of  the  occupancy  above  the  grade  floor.  Cer- 
tain occupancies,  such  as  banks,  barber  shops  and  offices,  are  classed 
as  "light"  occupancies  and  require  lighter  walls  than  other  occu- 
pancies which  are  classed  as  "ordinary." 

Where  a  l)uilding  is  near  enough  to  be  damaged  by  fire  from 
another  iMiiMing,  the  walls  are  required  to  extend  above  the  roof 
a  standard  distance,  to  be  of  proi)er  thickness  and  coped.  Charges 
are  provided  for  deficiencies  in  this  respect. 

In  the  same  class  of  buildings,  namely,  where  a  brick  basis 
rate  is  used,  the  presence  of  frame,  iron-sheathed  frame,  brick- 
veneered,  iron  and  glass,  hollow-cement-block  or  tile  walls  in  the 
front  or  rear  is  covered  by  a  proper  percentage  charge.  This  charge 
is  doubled  if  a  wall  of  this  character  is  a  side  wall.  A  charge  is  also 
made  for  plate  glass  windows  of  unusually  large  dimensions,  and 
for  bay  windows. 

In  buildings  rated  from  the  frame  basis  rate,  such  as  skeleton 
iron-clad  and  brick-vencered  buildings,  the  frame  wall  is  accepted 
as  a  standard  and  percentage  credits  are  made  for  better  construc- 
tion. No  credit  is  given  for  irnn-sheathcd  frame  walls  on  an  un- 
exposed building. 

Roof. 
In  the  case  of  brick  buildings  a  metal,  tile,  slate  or  approved 
composition  roof  is  accepted  as  standard  and  a  charge  of  20  per 
cent,  is  made  for  a  shingle  or  unapproved  composition  roof.  Charge 
is  also  made  for  frame  mansard  roof.  With  frame  buildings  a 
shingle  or  unapproved  composition  roof  is  accepted  as  standard  and 
a  credit  of  10  per  cent,  is  made  for  metal,  tile,  slate  or  approved 
composition. 

Ceilings. 

In  brick  buildings  a  charge  of  2  per  cent,  is  made  for  wooden 
ceilings,  each  story,  and  of  5  per  cent,  for  strawboard.  paper  or 
canvas  ceilings,  each  story.  These  charges  are  increased  one-half 
if  walls  as  well  as  ceilings  are  so  sheathed. 

Skylights. 
In  brick  buildings,  charges  are  made  for  openings  through  the 
roof  not  covered   with   standard   skylights.      Standard   skylight?   are 
described.     The  charge   is  3  per  cent,   for  the   largest   opening  of 

3S 


40  square  feet  or  less,  increased  1  per  cent,  for  each  additional 
40  square  feet  or  greater  part,  and  2  per  cent,  for  each  additional 
skylight.  The  3  per  cent,  charge  is  raised  to  5  per  cent,  in  the 
case  of  photographers'  skylights  not  standard. 

Floorway  Openings. 

In  brick  buildings  charges  are  made  for  openings  through  floors. 
No  charge  is  made  where  the  opening  is  protected  with  an  automatic 
closing  or  trap.  Credits  are  given  when  the  openings  through  a 
floor  of  superior  construction  are  protected  in  a  superior  manner 
specified.  All  of  the  openings  through  a  floorway  are,  for  conveni- 
ence, referred  to  as  its  retinue.  Charges  for  the  various  kinds  of 
floorways  and  retinues  are  made  by  the  following  table : 

Floorway  Retinue  Table. 
EACH  FLOORWAY  D  C  B  A 

With   retinue  d —4%  —3%  —1%  0 

With   retinue   c —2%  —2%  —1%  0 

With   retinue  b —1%  —1%  —1%  0 

With   retinue  a —0%  —0%  —0%  0 

With   retinue   below  a +5%  +5%  +5%  +5% 

For  each  "below  a"  opening  over 

one  up  to  double  the  charge...    +1%  +1%  +1%  +1% 

If  any  floorway  is  finished  with  concealed  spaces,  the  credits 
in  above  table  are  reduced  one  point. 

In  this  table  all  floorways  are  divided  into  four  grades  which 
may  be  roughly  defined  as  follows : 

A.  Matched  wooden  flooring  laid  on  joists  of  ordinary  dimensions 

with   lath   and  plaster,  wood  or  metal  ceiling  beneath. 

B.  Same  as  A.     Two  layers  of  matched  flooring. 

C.  Floorways  ftot  less  than  the   following : 

1.  Floors,  three  inches  thick  if  adequate   for  their  load. 

2.  Floorway  supports,  consisting  of  posts,  beams   and  girders, 

6x6  inches,  if  adequate  for  their  load.  If  cast-iron  or  steel, 
to  be  protected  by  2  inches  of  tcrra-cotta,  concrete  or  its 
equivalent.     No  strap-iron  stirrups  to  be  used. 

3.  Finish  without  concealed  spaces. 

4.  Partitions,  non-combustible. 

D.  Floorways  not  less  than  the  following: 

1.  Floors  three-inch  splined  plank  covered  with  one-inch  dressed 

flooring. 

2.  Floorway  supports,  consisting  of  posts,  beams  and  girders, 
8x8   inches    if    adequate    for   their    load.      If    cast-iron   or 

36 


steel,  to  be  protected  by  2  inches  of  terra-cotta,  concrete  or 
its  equivalent.  \o  strap  iron  stirrups  to  be  used.  Beams 
to  rest  on  wall  ledges,  or,  if  entering  walls,  to  be  self- 
releasing.  Posts  or  -jjillars  to  be  superimposed  throughout 
all  stories  with  ends  connected  by  approved  cast-iron  ca^5 
(self-releasing  as  regards  floor  beams)  with  cast-iron  base 
plates  and  pintles. 

3.  Finish  without  concealed  spaces. 

4.  Partitions  non-combustible. 

All  floorway  retinues  are  divided  into  four  grades,  which  may 
be  roughly  defined  as  follows : 

(7.  Opening  with  standard  trap  or  enclosure  of  matched  floor- 
ing, with  enclosure  door,  if  any,  of  same  matc-'.I  and 
self-closing. 

b.  Opening  with  standard  trap  or  enclosure  of  matched  floor- 

ing, two  thicknesses,  with  enclosure  door,  if  any,  of 
same  material  and  self-closing. 

c.  Opening  with  standard  trap  covered  with  tin  as   for  stand- 

ard fire  doors;  or  with  enclosure  of  plaster  or  cement 
on  both  sides  of  metal  lath,  supported  by  iron  frame, 
or  tile  or  terra  cotta  with  door  standard  metal  or 
metal-clad  and  self-closing. 

d.  Opening  in  brick  shaft,  with  standard  fire  doors. 

The  sign  (+)  stands  for  a  charge,  and  the  sign  ( — )  for  a 
credit.  With  this  explanation  we  are  able  to  make  the  proper  charge 
for  any  possible  combination  of  floorway  and  retinue  construction. 

As  this  method  of  treatment  of  floorway  openings  is  somewdiat 
new,  an  illustration  of  its  manner  of  application  will  be  in  order. 
Assume  a  three-story  brick  building  with  a  basement.  The  floor- 
ways  are  constructed  of  matched  wooden  flooring  and  therefore 
grade  as  A.  An  elevator  extends  from  the  basement  to  the  second 
story.  The  elevator  opening  through  the  first  floorway  (i.  e..  floor 
between  the  basement  and  first  story)  is  protected  by  an  automatic 
elevator  trap  which  grades  as  o.  The  elevator  opening  through  the 
second  floorway  is  unprotected  and  therefore  grades  as  "below  a". 
A  stairway  extends  from  the  basement  to  the  third  story  with  all 
openings  unprotected  and  therefore  grading  as  "below  a".  Each 
floorway  and  its  openings  are  charged  for  separately  from  the  other 
floorways  and  their  openings.  The  retinue  of  each  floorway  is 
graded  by  the  opening  of  poorest  protection  in  that  floorway.  The 
charge  for  the  first  floorway  retinue,  therefore,  will  be  for  a  retinue 
grading  as  "below  a"  combined  with  a  floorway  grading  as  A,  which 
by  reference  to  the  table,  gives  5  per  cent.  The  charge  for  the  sec- 
ond floorway  retinue  w-ill  be  for  the  same  gradings  of  retinue  and 

J7 


floorway,  increased  1  per  cent,  for  one  additional  opening  grading 
as  "below  a".  The  charge  for  the  third  floorway  will  be  for  the 
same  combination  with  only  one  opening,  i.  e.,  5  per  cent.  Our 
total  retinue  charge  for  this  supposed  building  is  therefore  5  per 
ccnt.+6  per  cent. +5  per  cent.,  or  16  per  cent. 

Two  reasons  exist  for  this  method  of  treatment  of  floorway 
retinues.  Please  notice  that  no  more  credit  is  given  for  a  retinue 
of  a  grade  superior  to  that  of  its  floorway  than  is  given  for  a 
retinue  of  the  same  grade  as  the  floorway.  No  more  credit  is 
given  for  stairway  in  a  brick  shaft  with  fire  doors  on  the  openings 
than  for  an  enclosure  of  matched  pine  with  a  self-closing  door  of 
the  same  material,  provided  the  floorways  are  merely  matched  floor- 
ing on  ordinary  joists.  In  other  words,  there  is  no  need  of  pro- 
tection for  opening  stronger  than  the  floorway  itself.  A  chain  is 
no  stronger  than  its  weakest  link.  Also  please  notice  that  the  table 
provides  that  the  largest  charge  shall  remain  until  all  of  the  open- 
ings in  a  given  floorways  are  protected.  The  credit  for  protecting 
all  openings  except  one  in  a  floorway  is  so  small  as  to  be  scarcely 
worth  the  expense.  This  ofifers  the  large  credit  for  the  protection 
of  the  last  opening,'  on  the  theory  that  the  danger  of  smoke  and 
fire  passisg  from  one  story  to  another  is  not  appreciably  dimin- 
ished until  all  openings  are  protected. 

Our  treatment  of  retinue  charges  thus  far  ha«;  dealt  only  with 
the  charges  for  openings  through  floors  above  "ordinary"  occu- 
pancies where  the  building  is  of  "ordinary"  occupancy  constructipn. 
As  explained  under  wall  charges,  such  occupancies  as  banks,  barber 
shops  and  offices  are  classed  as  "light"  and  other  occupancies  such 
as  wholesale  groceries,  meat  markets  and  department  stores  are 
classed  as  "ordinary."  With  "ordinary"  occupancies  is  generally 
found  what  the  schedule  classes  as  "ordinary"  construction,  -  i.  e., 
v.here  the  stairways,  elevators,  etc.,  lead  directly  from  the  rooms 
of  one  story  to  the  rooms  of  the  other  stories.  With  "light"  occu- 
pancies is  generally  found  what  the  schedule  classes  as  "hallway" 
construction,  i.  e.,  where  the  stairways,  elevators,  etc.,  are  in  sep- 
arate hallways.  In  the  case  of  hallway  construction,  the  schedule 
provides  that  the  floorway  openings  should  be  charged  for  as  in 
ordinary  construction,  with  the  added  provision  that  the  grade  of 
the  retinue  may  be  determined  by  the  construction  of  the  partitions 
separating  the  hallways  from  the  main  building,  as  well  as  by  the 
traps  or  enclosures  for  openings.  Where  the  partitions  are  thus 
classed  as  retinues,  the  following  standards  are  provided: 

"below  a."    Ordinary  wood  lath  and  plaster  with  wooden  doors. 

a.  Plaster  or  cement  on  metal  lathing  with  self-closing  doors 
of  wood  two  inches  thick. 

38 


b.     Plaster  or  cement   on   metal    lath   and   studding,   or   tile  or 
brick    with    self-closing    standard    metal    or    metal-clad 
doors. 
The  schedule  also  provides  that  when  a  story  contains  exclu- 
sively light  occupancies  its  retinue,   if  consisting  of  hallway  parti- 
tions as  above,  may  be  counted  as  one  grade  higher,  i.  c.,  if  "below 
u"  as  a,  if  a  as  b,  etc.    As  this  is  the  usual  condition  in  buildings  of 
hallway  construction,  such  as  office  buildings,  the  retinue  will  grade 
as  (7,  and  thrrcforc  no  charges  are  made  for  elevator  and  stairway 
openings  in  hallways  in  such  buildings. 

Partitions. 

In  brick  buildings  standard  partitions  between  ground  floor  or 
basement  occupancies  arc  described  as  brick,  tile  or  plaster  on  both 
sides  of  expanded  metal  on  iron  supports,  or  other  equally  fire- 
resisting  materials  and  small  charges  are  made  for  departures  from 
this  standard,  as  for  wooden  partitions,  etc. 

Chimneys. 

In  both  brick  and  frame  buildings  chimneys  and  flues  should 
be  of  brick,  built  from  the  ground,  or  may  be  Icdgcd  in  walls  of 
approved  construction.  Departures  from  this  standard  such  as 
chimneys  on  brackets  or  stovepipes  through  roof  or  partitions  aro 
properly  charged  for.  Charges  are  increased  one-fifth  for  each 
flue  or  stovepipe  so  deficient  up  to  douJile  the  charge. 

Exterior  Attachments. 
The   standard  brick  building  is   assumed  as   free   from  all   ex- 
terior  attachments    such   as   wood    cornices,    awnings,    roof   houses, 
etc.,  and  small  charges  arc  made  for  each  of  these  when  found  on 
such  buildings. 

Warerooms. 

In  the  case  of  brick  buildings  the  presence  of  a  frame,  iron- 
sheathed  frame,  skeleton  iron-clad  or  brick-veneered  addition  is 
met  by  a  percentage  charge  determined  by  the  percentage  relation 
which  the  floor  area  of  wareroom  bears  to  the  combined  floor  area 
of  main  building  and  wareroom.  Our  time  is  too  short  to  enter 
into  an  explanation  of  these  charges.  You  will  find  a  detailed 
treatment  of  this  subject  in  the  back  of  the  schedule. 

Superior  Construction. 

When  a  brick  building  is  found  of  superior  construction  to  that 

of    the    standard    assunuti,    i.    c.    that    of    the    average    mercantile 

building,  it  is  necessary  to  give  some  recognition  in   rate   for  such 

superiority.     Since  superior  construction  decreases  all  of  the  hazards 

59 


of  or  in  a  building,  such  recognition  should  decrease  all  charges 
for  structural  features  and  occupancy,  and  is  therefore  made  a  per- 
centage credit  of  the  rate  resulting  from  the  addition  of  all  charges 
for  such  features.     The  percentage  credits  are  given  herewith: 

a.  If  all   floorways  and  their  supports  class  as   D,  with   re- 

tinues   d Deduct     20% 

b.  If  all  floorways  and  their  supports  class  as  D,  with   re- 

tinues inferior  to  d,  or  if  all  floorways  and  their  sup- 
ports class  as  C  with  retinues  of  all  grades. .  .Deduct     10% 

c.  When  a  building  with  a  basement  or  over  one  story  high 

has  a  roof  of  ordinary  rafter  and   roof  board   con- 
struction, reduce  credit  a  five  points  or  b  three  points. 

d.  If   roof  boards   less   than   3-inch   splined   plank   and    (or) 

roof  timbers  are  less  than  6x6  inches,  reduce  credit 
a  two  points   (not  cumulative  with  c). 

e.  If  posts,  beams  or  girders  less  than  6x6  inches,  or  of  cast 

iron  or  steel  not  properly  protected,  or  if   strap  iron 

stirrups,  reduce  credit  b  four  points. 
/.     If  combustible  partitions,  reduce  credit  a  or  b  three  points. 
g.     When    ground    floor   of    a   building    without   basement   is 

non-combustible    Deduct      5% 

Objectionable  Conditions, 

-  We  have  now  discussed  all  of  the  regular  features  of  con- 
struction which  the  schedule  recognizes  by  percentage  charges  or 
credits.  In  the  case  of  unusual  conditions  of  building,  such  as 
cracked  walls,  broken  plaster,  etc.,  small  flat  charges  are  made, 
called  "after-charges,"  the  size  of  which  must  necessarily  be  left 
to  the  judgment  of  the  rater,  but  which  the  schedule  provides  may 
run  from  5  cents  to  $1.00.  These  charges  are  "added  to  building 
and  contents  after  final  rate,  including  exposures,  has  been  figured 
in  order  that  change  may  not  necessitate  a  re-rating." 

By  the  notations  made  under  each  of  the  abtive  headings,  please 
notice  that  the  only  structural  charges  and  credits  which  apply  to 
frame  buildings  are  those  for  height,  area,  walls,  roof,  chimneys 
and  objectionable  conditions.  No  charge  is  made  for  other  struc- 
tural features  such  as  skylights,  partitions,  etc.,  because  their  pres- 
ence is  not  considered  as  increasing  the  hazard  of  the  building  to 
a  sufficient  extent  to  warrant  analysis.  The  slight  increase  in 
hazard,  if  any,  is  thrown  into  the  basis  rate  with  other  unanalyzed 
hazards. 

With  the  exception  of  the  occupancy  charge  we  are  now  in  a 
position  to  figure  the  rate  on  a  building  that  is  unexposed  and  un- 
protected.    Before  investigating  the  occupancy  charge,  the  total  of 

40 


which  is  a  percentage  like-  any  of  the  charges  for  structural  features, 
I  propose  to  rate  a  typical  building,  assuming  an  occupancy  charge, 
in  order  that  \vc  may  sec  how  far  wc  have  proceeded  with  our  study. 

Example,  Brick  Building. 

Basis  rate,  five  story  and  basement,  60  tabic $0.77 

Area,  5,000  square  feet;  six  floors  (including  basement)  22% 

Two  walls,  side,  deficient  4.  inches  each,  at  4% 8% 

Two  parapets,  deficient  12  inches  each  in  height,  at  2%.     4% 
Five    floorways    of    grade    B,    with    two    openings    each 

floorway,  grading  as  "below  a";  57o+l%=6%x5=.   30% 
Occupancy   (assumed)    109% 

Charges   added    and    extended 173%       1.33 

Occupied  building  rate $2.10 

Example,   Brick- Veneered    Building. 

Basis  rate,  two  stories,  95  table $1.00 

Area,  3.000  square  feet .* 6% 

Chimney  on  brackets 8% 

Occupancy  (assumed)    144% 

Total  charges   \sS/o 

Walls,  brick-vcnecrcd   with  metal   roof,  credit 15% 

Net  charge  extended 143%       1.43 

Occupied   building   rate $2.43 

OCCUPANCY. 

We  now  approach  that  part  of  our  subject  which  with  exposure, 
Mr.  Dean  has  said,  constitutes  the  real  substance  of  fire  hazard. 
"In  the  matter  of  occupancy  there  is  no  evidence  that  classification 
has  playecU  more  than  a  rudimentary  part  in  any  existing  tariff." 
The  vast  majority  of  occupancy  charges  in  most  rating  schedules 
are  merely  lump  sums  supposed  to  cover  all  hazards  found  with 
the  occupancies  to  which  they  apply.  We  look  in  vain  for  ade- 
quate treatment  of  the  numerous  causes  or  effects  of  fire,  smoke 
and  water  found  in  occupancy,  such  as  labor,  heat  devices,  traffic 
hazard,  etc.  The  problem  is  a  difficult  one,  and  needed  all  of  that 
ability  to  assort  and  classify,  which  stands  out  as  the  most  char- 
acteristic of   Mr.   Dean's  genius. 

41 


The  hazard  of  occupancy  in  general  is  recognizxd  in  three 
ways ;  first,  as  a  cause  of  fire,  as  originating  combustion ;  second, 
as  a  medium  for  fire,  as  aiding  combustion  when  once  started, 
and  third,  as  an  effect  of  fire,  smoke  or  water.  The  hazard  of 
occupancy  as  a  cause  of  fire  will  be  discussed  under  a  classifica- 
tion of  cause ;  the  hazard  as  a  medium  for  fire  depends  upon  the 
combustibility  of  the  contents  and  will  be  discussed  under  a  classi- 
fication of  combustibility;  and  the  hazard  as  an  effect  of  fire  de- 
pends upon  the  damageability  of  the  contents  and  will  be  discussed 
under  a  classification  of  damageability.  As  the  hazards  of  causes 
vary  with  the  combustibility  of  the  material  or  stock  with  which 
they  are  found,  we  naturally  seek  first  the  classification  of  com- 
bustibility. 

Classification  of  Combustibility. 

The  grade  of  combustibility  of  merchandise  is  sometimes  in- 
fluenced by  packages,  by  quantity,  or  by  arrangement  more  than 
by  the  merchandise  itself.  Sometimes  "the  materials  used  for 
packing  or  the  debris  resuhing  from  unpacking  constitute  the 
real  hazard  of  an  occupancy."  Some  stocks  are  spread  out  for 
display.  Other  stocks  are  stored  away  in  large  quantities  piled  to 
secure  greatest  economy  of  space.  These  must  be  taken  into 
account  eventually.  Ignoring  them  for  the  moment,  however,  the 
Schedule  offers  us  five  grades  of  combustibility  based  upon  the 
quality  of  the  merchandise  itself.  For  convenience  these  grades 
are  designated  as  (CI),  (C2),  etc.,  where  C  stands  for  combusti- 
bility. 

(CI)  Low.  "Merchandise  which  does  not  in  itself  constitute 
a  fuel  for  the  spread  of  combustion.  Examples :  hardware,  leather, 
hides  (green  or  dry),  rubber  goods,  wool,  woolen  goods,  canned 
goods,  etc."     Charge  5  per  cent. 

(C2)  Middling.  "Merchandise  which  burns  moderately  in  itself 
but  may  contain  small  quantities  of  a  higher  grade  of  combustibility, 
either  through  policy  permits  or  common  usage.  Exan^ples :  retail 
groceries  (with  matches,  coal  oil.  etc.),  dry  goods  or  country  store 
stocks  (with  celluloid  goods,  cotton  batting,  millinery,  straw  ^ods, 
etc.)."     Charge  10  per  cent. 

(C3)  High.  "Merchandise  which  burns  freely,  constituting 
an  active  fuel.  Examples :  straw  goods,  millinery,  hay,  hemp,  etc." 
Charge  20  per  cent. 

(C4)  Quasi-incendiary.  "Merchandise  that  burns  with  great 
intensity  and   is  difiicult  to  extinguish,  but   is   not  liable  to   sponta- 

42 


neous  combustion  or  to  ignition  except  through  actual  contact  with 
fire.  Examples :  matches,  celluloid  goods,  saltpeter,  etc. ;  also 
combustible  substances  finely  divided,  such  as  shavings  in  hand 
woodworkers,  carpenters  or  cooper  shops,  etc.,  but  not  so  finely 
divided  as  to  constitute  explosive  dusts."     Charge  80  per  cent. 

(C5)  Incendiary.  "Including  substances  that  burn  with  an  in- 
tensity equal  to  or  greater  than  (C4),  and  in  addition  give  off 
inflammable  or  explosive  vapors  at  ordinary  weather  tempera- 
tures, or  that  spontaneously  ignite  through  exposure  to  air  or  mois- 
ture, also  substances  which  as  a  result  of  industrial  processes 
produce  large  quantities  of  dusts,  lint  and  other  finely  divided 
vegetable  debris  that  is  subject  to  flash  fires  or  explosions,  if  not 
safely  disposed  of  through  an  approved  blower  system.  Examples : 
crude  petroleum  and  all  its  lighter  products,  ethers,  carbide,  tur- 
pentine and  the  debris  of  planing  mills,  cotton  gins,  flouring  mills, 
etc.     Charge  320  per  cent. 

In  addition  to  these  five  grades  of  combustibility  based  upon 
the  quality  of  merchandise  itself,  two  intermediate  grades  arc 
established  by  the  conditions  of  quality  or  arrangement,  which. 
we  have  said,  were  ignored  in  the  classification  of  the  five  grades, 
as  follows : 

(C3J^).  "This  grade  is  not  susceptible  of  definition  by  quality, 
but  is  used  principally  for  quantity,  being  available  for  large  open 
stocks  of  (C3)  or  for  moderate  quantities  of  (C4)."  Charge  40 
per  cent. 

(C4^).  "Like  (C3'/2),  this  grade  is  not  susceptible  of  close 
qualitative  definition,  but  it  is  available  for  minor  industrial  risks 
or  where  grade  (C5)  is  reduced  by  an  approved  blower  system, 
also  for  animal  substances,  such  as  wool.  felt.  etc..  which  give 
off  combustible  dusts  of  a  lesser  hazard  than  the  dusts  from 
fibrous  vegetable  substances,  such  as  wood,  cotton,  etc.  The  class 
is  also  used  quantitatively  for  large  storage  risks  of  grade  (C3) 
or  (C4)."     Charge  160  per  cent. 

Classification  of  Causes. 

Leaving  for  the  moment  the  classification  of  combustibility  of 
stocks  or  material,  we  pass  to  the  more  complicated  classification 
of  causes  of  fires  as  found  in  occupancy.  This  classification  of 
causes  presents  such  a  formidable  array  of  material  that  I  have 
prepared  same  in  the  form  of  a  diagram  in  hopes  thus  to  bring 
the  subject  before  you  in  the  clearest  and  most  concise  manner. 
The   diagram   follows : 

4? 


Diagram  for  Classilicalion  of  Causes. 


r  ° 


tn 
0) 
en 

3 
d 
O 


o 


f  Banks. 

Barber  Shops. 

Massage  Parlors. 

Offices. 

Studios. 

Sleeping  Rooms. 
I.  Sample  Rooms. 

Traftlc  r  Apartment  Houses. 

Boarding  Houses. 

T-f  otif  Is 

Habitational     Qiy^  Buildings  (City). 
L  Lodging  Houses. 

I"  Club  Rooms,  Lodge  Rooms,  Society  Halls, 
Dance  Halls  (Private),  and  Churches. 
Assemblage       Billiard  Saloons.  Bowling  Alleys.  Gymnasi- 

or  ums.  City  Council  and  Court  Rooms. 

Recreational      Armories  or    Drill    Halls,    Academies    and 
Schools. 
^  Halls  (Public). 
Material.  Raw.  Wrought  or  in  Process. 
Labor. 


Industrial 

or 

L  Handicraft 


Motive 
Power 


Heat 

Producing 

or 

I    Utilizing 
[    Devices. 


r  Electric  Motors.  Open. 
Encased  and  Induc- 
tion. 
Gas  and  Hot  Air  En- 
gines. 
Kerosene.  Gasoline 
and     Natural    Gas 
Engines. 
Steam  Boilers. 
Hand  and  Movable 
Furnaces. 

f Independent 
Furnaces. 


Furnaces 


Fixed 
Furnaces 


Dry  Rooms  I, 


Furnaces  con- 
nected with 
Ovens. 

Furnaces  con- 
nected with 
Kettles. 

Furnaces  used 
for  heating 
or  lighting 
I     buildings. 


I  Forges 
I  Unclassed   ■'.  Dry  heat  Boxes  or  Cauls. 
(  Steam  Chests. 

Following  the  diagram,  please  note  that  all  causes  of  fires 
pertaining  to  occupancy  are  divided  into  inert  and  active.  By  the 
list  that  is  given  for  inert,  it  is  evident  that  .such  occupancies  are 
almost  without  hazard,  as  far  as  cause  is  concerned.  The  slight 
physical  hazard,  if  any,  is  considered  as  ofYsct  by  the  protection 
afforded  by  human  presence,  and  no  charge  is  made.  Any  special 
hazard  that  may  exist  in  these  occupancies,  such  as  a  hot-water 
heater  for  Ijaths  in  a  barber  shop,  is  covered  by  specific  charge. 

Active  occupancies  are  divided,  as  shown,  into  the  hazards  of 
traffic  and  the  causative  hazards  in  habitational,  assemblage  or 
recreational  and  industrial  occupancies.  The  traffic  hazard  is  that 
"caused  by  employes  and  customers  in  the  regular  transaction  of 
business,  connected  witli  mercantile  shops,  retail  or  wholesale."  As 
the  hazard  increases  with  the  combustibility  of  the  stock,  the  charge 


44 


ranges  from  3  per  cent,  for  a  (CI)  stock  up  to  80  per  cent,  for  a 
(C5)  stock,  llabitational  occupancies  which  arc  self-explanatory 
are  covered  by  the  various  charges  provided  for  the  different 
occupancies  listed  under  this  class.  Assemblage  or  recreational  oc- 
cupancies consist  of  "rooms  or  halls  used  for  assemblies  or  resorts, 
where  people  gather  together  for  some  common  purpose,  aside 
from  commercial  or  industrial  activities."  Various  charges  are 
provided  for  this  class. 

Industrial  occupancies  consist  "of  all  industrial  activities  found 
in  mercantile  buildings,  either  connected  with  stocks  of  merchan- 
dise or  independent."  The  hazards  of  industrial  occupancies  are 
divided,  as  shown,  into  those  caused  by  materials,  raw,  wrought  or 
process,  by  labor  and  by  heat-producing  or  utilizing  devices.  The 
hazard  of  materials  consists  in  their  presence  as  a  medium  of 
combustion  and  hence  is  charged  for  according  to  the  preceding 
classification  of  combustibility.  Labor  covers  "the  hazard  of  mani- 
pulation of  materials  in  the  making,  handling,  packing,  shipping, 
etc."  The  average  number  of  hands  engaged  is  used  as  a  basis  for 
the  charge  for  labor,  the  amount  of  which  depends,  of  course,  upon 
the  combustibility  of  materials  handled.  A  minimum  charge  for 
five  hands  or  under  is  given,  together  with  charges  for  numbers 
over  five.     I  give  a  section  of  the  table  of  labor  charges: 

Labor  Table. 


C  1. 

C2. 

C  3. 

C3>^. 

C4. 

C4^ 

C5. 

Minitmtm  C/iarac 

5  hands  or  under. . . 

5% 

10% 

15% 

25% 

40% 

60% 

80% 

Additional  Labor. 

5  additional  hands.  . 

4% 

5% 

6% 

7% 

9% 

11% 

13% 

10 

8% 

10% 

12% 

14% 

18% 

22% 

26% 

20           "            " 

12% 

15% 

18% 

21% 

27% 

33% 

39% 

30           "   •        '■ 

16% 

20% 

24% 

28% 

36% 

44% 

52% 

40 

20% 

25% 

30% 

35% 

45% 

55% 

65% 

Heat  producing  or  utilizing  devices  are  of  such  variety  as  to 
necessitate  an  extensive  classification  of  their  own.  The  schedule 
considers  them  under  the  heads  of  motive  power,  furnaces,  dry 
rooms  and  unclassed.  Charges  for  motive  power  are  made  accord- 
ing to  the  nature  of  the  power  device  and  the  combustibility  of  tho 
stock  or  material  liy  a  table  of  motive  power  charges,  a  section  of 
which  is  shown  herewith  : 


45 


Power  Table. 


Electric  Motor. 

Gas. 
Hot  Air. 
Kerosene 

or 
Natural 

Gas 
Engine. 

Standard 
Gasoline 
Engine. 

Steam 

Power. 

Pattern. 

Class. 

Portable  B  &  E. 

Stationary  B  &  E. 

Encased  or 
IndactioQ. 

Not 
Encased. 

Brick 
Stack. 

Metal 
Stack. 

Brick 
Stack. 

Metal 
Stack. 

C  1 
C  2 
C3 

C3K 

0% 

0% 
0% 
0% 

0% 
10% 
15% 
20% 

5% 
10% 

15% 
20% 

10% 

15% 
25% 
40% 

15% 
25% 
35% 
45% 

30% 
40% 
50% 
60% 

40% 
50% 
60% 

70% 

60% 

70% 
80% 
90% 

The  charges  in  this  table  cover  the  hazard  of  one  device  of 
the  kind  and  are  increased  one-fifth  up  to  double  the  charge  for 
additional  devices.  Where  more  than  one  kind  of  power  device  is 
found  in  one  occupancy,  the  full  charge  is  made  for  the  most 
hazardous,  plus  one-fifth  of  the  charge  of  the  others  up  to  double 
the  charge  of  the  most  hazardous.  For  instance,  if  we  have  two 
open  motors  in  a  C3  stock  our  charge  will  be  \5%+  (1/5  of  15%=) 
3%=18% ;  or  if  we  have  one  stationary  boiler,  brick  stack,  and  two 
electric  motors  in  the  same  grade  of  stock  (C3),  our  charge  will  be 
60%+(2/5  of  15%=)  6%=66%. 

The  above  power  charges  cover  the  hazard  of  the  device  in 
the  open.  When  located  in  separate  room  or  power  house  reduc- 
tions from  the  above  charges  are  allowed.  The  additions  provided 
by  the  schedule  for  more  than  one  metal  stack,  or  for  floor  pierced 
by  metal  stack,  or  for  non-standard  arrangement  of  gasoline  engine 
are  self-explanatory. 

Furnaces  are  classed  as  hand  or  movable  furnaces,  and  fixed 
furnaces.  Hand  or  movable  furnaces  include  fire,  glue  and  solder- 
ing pots,  crucibles,  cupels,  ironing  furnaces  and  other  movable  heat 
devices.  Fixed  furnaces  include  furnaces  which  stand  by  them- 
selves for  producing  heat  to  be  used  in  dry  rooms,  or  for  heating 
buildings,  including  cooking  stoves,  or  ranges  and  laundry  furnaces; 
also  furnaces  connected  with  ovens,  such  as  bake-ovens,  china  firing 
ovens,  annealing  ovens,  japanning  ovens,  coffee-roasting  ovens,  etc., 
also  furnaces  "connected  with  open  kettles  or  vats  for  heating 
substances  liable  to  combustion,  as  in  candy  making,  meat  render- 
ing, cruller  making  in  bakeries,  etc."  Charges  for  these  furnaces 
differ  with  the  kind  of  furnace  and  the  combustibility  of  the  stock 
or  material,  and  are  made  by  a  table,  a  section  of  which  is  shown 
herewith : 


46 


Furnace  Table. 


Hand 

or 
Mov- 
able. 

Fixed  or  Stationary. 

Steam  Kettles 

with 

Corabastible 

Contents. 

Farnaces,  Inde- 
pendent or  with 

Kettles  with 

Non-combnstible 

Contents. 

Connected  with 

Each 

Class. 

Ovens. 

Kettles  wilh 

Corabastible 

Contents. 

'  Additional 
Kettle 
with  same 
Furnace. 

CI 

C2 

C3 

C3>^ 

C4 

C4>^ 

C5 

5% 
7% 
10% 
12% 
16% 
20% 
25% 

0% 
5% 

7% 
•12% 
20% 
25% 
30% 

5% 
10% 
15% 
25% 
40% 
50% 
60% 

10  9& 
20% 
25% 
35% 
50% 
60% 
70 -^^ 

15% 
25% 
35% 
55% 
85% 
105% 
125% 

3%      S 

5%   ti 

7%     3S 
11%     |-g 
17%      o^ 

21%      as 
25%      t^^ 

Above  charges  arc  based  upon  the  use  of  coal  or  charcoal  for 
fuel,  and  are  reduced  one-half  if  artificial  gas  or  electricity  is  used. 
When  more  than  one  furnace  the  charge  is  increased  one-fifth  for 
each  furnace  over  one  up  to  double  the  charge.  In  the  case  of  fixed 
furnaces  the  charges  are  doubled  if  not  on  approved  non-combus- 
tible floor  (except  when  electricity  is  used  for  fuel).  Charges  arc 
increased  for  metal  stacks  from  furnace,  and  credits  are  given  for 
location  in  separate  rooms  or  additions  in  the  same  manner  as  for 
power  devices.  As  the  heating  of  buildings  is  almost  universal,  the 
schedule  follows  the  precedent  established  by  other  tariffs  of  ac- 
cepting the  common  condition  as  the  standard,  and  regards  the 
hazard  of  furnaces  and  steam  boilers  (not  over  15  pounds  pres- 
sure) used  exclusively  for  heating  the  building  as  included  in  the 
basis  rate.  No  charge  is  made  for  such  furnaces  and  boilers  under 
the  above  table,  and  a  credit  is  given  to  a  building  without  heat  or 
heated   from   outside   source. 

Dry  rooms  comprise  the  next  class  of  heat  utilizing  devices. 
Three  classes  of  dry  rooms  are  recognized,  i.  e.,  non-combustible, 
metal  and  asbestos  lined  and  frame.  Three  grades  of  heat  are 
recognized,  i.  e..  under  125  degrees,  125  degrees  to  200  degrees,  and 
200  degrees  to  300  degrees.  Charge  is  made  according  to  the  class 
and  temperature  of  dry  room,  and  the  combustibility  of  the  con- 
tents.    I  give  the  table  of  charges  for  non-combustible  dry  rooms. 

Dry  Room  Table. 


Maximum  Temperature. 

CI 

C2 

\_<.llliljll3 

C3 

lUllIl^ 

C3'/< 

C4  and  over 

Under  125° 

57<' 

10% 

15% 

20% 

257c 

125  to  200° 

10%) 

15% 

20% 

25% 

30% 

200  to  300° 

15% 

20% 

30% 

40% 

50% 

The  device   furnishing  heat   for  the  dry  room  is  charged   for 


47 


separately  as  an  independent  furnace  unless  located  inside  the  dry 
room,  when  the  charges  given  above  are  doubled. 

Forges,  dry  heat  boxes  or  cauls  and  steam  chests  are  regarded 
as  the  unclassed  heat  devices.  Forges  are  regard  as  fixed  or 
movable  and  charges  are  based  upon  combustibility  of  stock  or 
material,  and  kind  of  floor.  Dry  heat  boxes  are  treated  in  much 
the  same  manner  as  dry  rooms,  except  that  tlie  charges  are  smaller. 
No  charge  is  made  for  a  wet-steam  chest  safely  arranged. 

Classification  of  Damageability. 

The  treatment  of  medium  and  cause  being  completed,  we  have 
left  only  damageability  or  effect,  before  assembling  our  various 
charges  into  the  lump  occupancy  charge.  In  case  of  fire,  goods 
are  damaged  by  fire,  heat,  smoke,  water,  change  of  temperature, 
breakage,  soilure,  theft,  etc.  For  convenience  fire  and  heat  are 
called  direct  effects  and  the  others  resultant.  Damageability  is 
classed  in  four  grades  designated  for  convenience  as  (Dl),  (D2), 
etc.,  where  D  stands  for  damageability. 

(Dl)  Low.  "Merchandise  that  is  largely  immune  to  resultant 
effects,  being  materially  affected  by  the  direct  effects  of  fire.  Ex- 
amples :  Heavy  hardware,  leather  or  rubber  stocks,  hides,  wool  and 
woolen  goods,  canned  goods,  etc." 

'(D2)  Middling.  "Merchandise  that  is  but  moderately  affected 
by  direct  and  resultant  effects.  Examples :  Retail  groceries,  dry 
goods,  boots  and  shoes,  hats  and  caps,  etc." 

(D3)  High.  "Merchandise  that  is  easily  damageable  by  direct 
or  resultant  effects.  Examples :  Musical  merchandise,  books  and 
stationery,  paper,  butter,  eggs  and  cheese  stocks,  fruits,  etc." 

(D4)  Extra.  "Merchandise  that  is  liable  to  heavy  damage 
from  slight  causes  either  direct  or  resultant  ('Total  Loss  Risks'). 
Examples:  Millinery,  artificial  flowers,  florists'  stocks,  contents  of 
green  or  hothouses,  stocks  of  birds  and  rare  animals,  high-grade  art 
stocks  and  paintings." 

The  grades  of  Dl'^,  D2i/2  and  DS^^  have  been  established  half 
way  between  the  regular  grades,  to  include  certain  classes  which 
differ  from  the  regular  grades  by  amounts  too  small  to  warrant 
placing  them  in  the  next  higher  or  lower  grades. 

Much  has  been  written  in  discussion  of  the  proper  manner 
of  figuring  rates  on  contents.  'What  relations  shall  the  rate  on 
contents  bear  to  that  on  building?  Shall  the  difference  between 
contents  rate  and  building  rate — let  us  call  this  difference  the  con- 
tents differential — decrease  as  the  building  rate  becomes  higher? 
H  so,  shall  this  decrease  be  absolute  or  relative?  Shall  fire  depart- 
ment protection  increase  the  differential?  Shall  the  differential 
vary  with  the  floor  or  story  upon  which  the  stock  is  found?    As  the 

48 


province  of  this  paper  is  to  explain  and  not  discuss,  we  must  be 
content  with  an  investigation  of  the  treatment  of  the  Analytic  Sys- 
tem on   these  points. 

Mr.  Dean  attempted  to  solve  these  questions  in  his  treatment 
of  damagcability.  The  daniageability  of  a  stock  has  no  effect  upon 
the  containing  building.  Damagcability  should  be  regarded  merely 
as  relative  and  the  charge  for  damagcability  should  measure  the 
difference  bctw-een  the  damagcability  of  the  building  and  content;. 
Looking  at  it  in  this  way,  the  charge  obviously  should  be  an  amount 
(not  percentage)  added  to  -the  final  building  rate.  This  amount 
should  be  more  where  the  building  is  brick  than  where, it  is  frame, 
on  account  of  the  brick  being  less  damageable  than  the  frame — due 
chiefly  to  salvage  in  brick  walls — and  hence  further  removed  from 
the  hazard  of  the  contents.  This  amount  should  increase,  not  only 
with  the  damagcability  of  the  contents  but  also  with  the  efficiency 
of  fire  protection  due  to  the  increased  difference  in  the  amounti 
of  loss  on  buildings  and  contents  under  better  grades  of  protection. 
This  difference  has  even  reached  a  point  in  the  larger  cities  where 
experience  shows  losses  on  contents  three  or  four  times  as  much 
as  on  buildings.  The  schedule  provides,  therefore,  proper  amounts 
as  expressing  this  difference  in  hazard  for  each  of  the  four  grades 
of  damagcability  for  contents  located  on  the  ground  floor.  A  regu- 
lar scale  of  increase  is  applied  for  location  in  basement  or  above 
ground  floor  and  also  for  the  higher  grades  of  protection.  One 
table  based  upon  a  charge  of  10  cents  for  (Dl),  20  cents  for  (D2), 
40  cents  for  (D3).  and  60  cents  for  (D4)  contents  on  the  ground 
floor  of  a  building  without  fire  protection  was  thus  computed  and 
called  the  "100"  contents  table.  The  grades  DVA,  02'/^  and  D3^ 
were  figured  half  way  between  the  regular  grades.  Lower  tables 
were  also  figured  from  the  "100"  table  by  taking  a  uniform  per- 
centage of  its  charges.  Thus  the  "80"  table  was  80  per  cent,  of 
the  "100"  table,  "70"  table  70  per  cent,  of  the  "100"  table,  etc. 
As  an  illustration,  I  give  you  contents  table  No.  70  applying  only 
in  a  town  without  fire  protection.  The  increase  for  higher  grades 
of  protection  will  be  taken  up  in  the  paper  dealing  with  Protection : 

Brick  Contents  Table. 
Location  of  Contents.        Dl.     DVA.     D2.     D2'<.    D3.     D3'/<.    D4. 

Basement    $0.15   $0.19   $0.23   $0.31    $0.38   $0.46  $0.54 

Ground   floor 07       .11        .14       .21        .28       .35       .42 

Second  floor 15       .19       .23       .31       .38       .46       .54 

Third  floor   and   over 20       .25       .29       .37       .45        .53       .6i 

With  reference  to  frame  buildings,  the  schedule  provides  that 
contents  grading  as  (D3)  and  (D3;S)  shall  take  a  10c  contents  dif- 
ferential and    (D4)   a  14c  differential  in  towns  without  protection. 

49 


Contents  grading  as  (Dl),  (Dl^),  (D2)  and  (D2^)  take  same 
rate  as  building. 

We  have  thus  hurriedly  summarized  this  classification  of  cause, 
medium  and  effect,  which  analyzes  occupancy  so  much  more  closely 
than  any  other  schedule.  We  have  not  sought  to  confuse  our  sub- 
ject by  this  treatment  of  classification,  but  rather  have  felt  that 
familiarity  with  its  methods  was  necessary  to  a  thorough  under- 
standing of  the  occupancy  lists  as  they  appear  in  the  schedule 
itself.  Please  remember  that  the  average  rater  in  his  daily  use  of 
the  schedule  seldom  refers  to  this  extiensive  classification.  It  v;as 
used  by  the  .author  of  the  schedule  and  those  associated  with  him 
in  their  compilation  of  the  occupancy  list.  The  rater,  however, 
merely  refers  to  these  lists  and  uses  such  charges  as  they  supply. 

All  of  the  notations  covering  occupancy  charges  are  placed  in 
an  alphabetical  list  of  occupancies,  wherein  the  charges  appear  in 
three  columns  and  opposite  the  name  of  the  occupancy  *^o  which 
they  apply.     A  section  of  this  occupancy  list  appears  as  follows: 

Brick  Occupancy  List.  12  3 

Carpet  Cleaning  Establishments  (not  over  1  gal- 
lon of  gasoline  in  approved  safety  can)     25%     40%     D2 

1.  Additional  labor  (C3^). 

2.  Power  (C3i^). 

3.  If  gasoline  not  in  approved  safety  can.  .     10% 

4.  If  over  1  gallon  of  gasoline,  see  Cleaning 

Establishments   (Naphtha,  etc.). 
Carpet  Linings  and  Mattings,  paper  or  straw...     10%     20%     D3 
Carpet  and  Rugs,  Stocks  of 3%      5%     DV/z 

1.  Labor   (sewing)    (CI). 

2.  Power  (CI). 

Carpet  Weaving 10%     10%     D2 

1.  Additional  labor  (C2). 

2.  Power    (C2). 

Column  2  contains  the  combustibility  charge  established  by 
the  classification  of  combustibility  given  above.  Column  1  is  the 
column  of  "Causes"  and  contains,  in  the  case  of  industrial  occu- 
pancies, the  minimum  charge  for  labor  established  by  the  labor 
table;  in  the  case  of  mercantile  occupancies,  the  charge  for  traffic, 
and  in  the  case  of  habitational,  assemblage  or  recreational  occu- 
pancies, the  charge  established  in  the  classification  of  causes  for 
these  occupancies.  Charges  for  other  causative  hazards  are  made 
by  reference  to  the  proper  tables  in  the  classification  under  causes, 
and  the  grade  of  combustibility  for  which  the  charge  is  to  be  made 
is  provided.  As  an  illustration  the  words  "Additional  labor  (C3^)" 
under  Carpet  Cleaning  Establishments  mean  that  a  charge  should 

50 


be  made  from  the  labor  lablc  for  the  average  number  of  hands 
over  5  engaged  in  the  work  on  a  basis  of  (C3'/^)  combustibility. 
The  words  "Power  (C3J/2)"  mean  that  any  power  device  sliould 
be  charged  for  according  to  the  power  table  on  a  basis  of  (C3>4) 
combustibility.  Column  3  is  the  column  of  cfifcct.  It  classifies  the 
damagcability  of  the  contents  and  means  tliat  tlie  proper  contents 
differential  should  be  selected  from  the  contents  table,  according 
to  the  floor  in  which  the  stock  is  located,  and  added  to  the  final 
building  rate  to  establish  the  contents  rate. 

In  the  case  of  a  building  occupied  by  only  one  tenant,  called 
a  "single  occupancy"  risk,  the  sum  of  the  charges  in  columns  1 
and  2  and  those  for  special  features,  additional  labor,  power,  etc., 
gives  the  total  occupancy  charge  to  be  added  to  the  deficiency 
charges  to  give  the  final  rate  on  building.  In  the  case  of  a  build- 
ing occupied  by  more  than  one  tenant,  callod  a  "multiple  occu- 
pancy" risk,  the  same  method  is  followed,  e.xcept  that  only  highest 
charge  in  column  2  is  used.  This  is  based  on  the  theory  that 
"combustibility  as  a  form  of  latent  energy  is  governed  by  the 
physical  law  that  all  transfers  of  energy  of  any  given  kind  are 
from  bodies  having  more  to  those  having  less.  Under  this  law 
the  highest  charge  only  in  column  2  shou'.d  enter  into  the  rate, 
regardless  of  the  number  of  occupancies  in  the  containing  build- 
ing." Illustration,  single  occupancy:  Assume  building  containing 
stock  of  carpet  linings  and  mattings.  The  charge  (see  occupancy 
list  above)  is  10  per  cent. +20  per  cent.=30  per  cent.  Illustration, 
multiple  occupancy :  .Assume  one-story  building  containing  two 
tenants,  one  carrying  a  stock  of  carpet  linings  and  mattings  as 
above,  and  the  other  a  stock  of  carpets- and  rugs  without  carpet 
sewing.  The  charge  (see  occupancy  list  above)  is  the  sum  of  both 
charges  in  column  1  and  the  higher  charge  in  column  2,  i.  e.,  10 
per  cent. +3  per  cent. +20  per  cent. =33  per  cent. 

The  above  classification  of  combustibility  has  not  been  extended 
as  yet  to  the  figuring  of  the  occupancy  charge  in  frame  buildings. 
This  was  due  to  the  precedent  established  by  previous  tariffs, 
which  made  it  necessary  that  the  rate  on  a  frame  building  of  more 
than  one  occupancy  should  agree  closely  with  the  rate  on  a  row 
of  frame  buildings  of  the  same  occupancy.  .As  the  extension  of 
the  above  classification  to  this  class  would  not  produce  this  result, 
a  separate  treatment  was  given  the  occupancy  of  frame  buildings. 
"The  exigencies  of  the  case  have  been  met  by  making  a  total  occu- 
pancy charge  that  will  produce  a  rate  for  each  specific  class,  which 
substantially  agrees  with  its  average  rate  as  found  in  existing 
tariffs.  This  total  charge  is  then  apportioned  to  columns  1  and  2 
by  placing  in  the  former  enough  to  approximate  the  radiated  ex- 
posure of  the  risk  under  the  40  per  cent,  exposure  standard  and 

51 


placing  the  balance  of  the  charge  ip  column  2,  in  lieu  of  the  com- 
bustibility charge  found  in  column  2  in  brick  tariff.  In  all  the 
minor  occupancies  where  the  quantity  of  combustibles  is  negligible, 
as  well  as  in  all  stocks  that  would  ordinarily  class  as  (CI)  and 
(C2),  this  leaves  no  remainder  to  appear  in  column  2."  With 
this  exception,  however,  the  occupancy  list  for  frame  buildings 
appears  very  much  the  same  as  for  brick  buildings  and  is  used  in 
exactly  the  same  way.  A  section  of  frame  occupancy  list  appears 
as  follows : 

Frame  Occupancy  List.  _1 2  3 

Carpet  CleaningEstablishments  (not  over  1  gal- 
lon of  gasoline  in  approved  safety  can)     70%     30%     D2 

1.     Additional  labor   (C3^). 

2.'    Power  (C3>4). 

3.  If  gasoline  not  in  approved  safety  can.  . .     10% 

4.  If  over  1  gallon  of  gasoline  see  Cleaning 

Establishments    (Naphtha,    etc.). 
Carpet  Linings  and  Mattings,  Paper  or  Straw..     60%     20%     D3 
Carpet  and  Rugs,  Stocks  of 30%  DVA 

1.  Additional  labor  (sewing)    (CI). 

2.  Power    (CI). 

Carpet  Weaving 50%  D2 

1.  Additional  labor  (C2). 

2.  Power   (C2). 

You  will  remember  at  the  conclusion  of  our  treatment  of  con- 
struction that  an  illustration  was  given  of  the  method  of  rating 
brick  and  brick-veneered  .buildings  in  which  an  occupancy  charge 
of  109  per  cent,  for  the  brick  and  of  144  per  cent,  for  the  brick- 
veneered  was  assumed.  We  are  now  in  a  position  to  illustrate 
the  method  of  figuring  these  two  occupancy  charges  and  also  of 
obtaining  the  rate  on  contents. 

Occupancy:  Carpet  Cleaning  Establishment. 

Brick       Rrick-Vcneered 
Building.         Building. 
Regular  occupancv  charge    (see  occupancy 

lists)    25%+46%= 65%     70%+30%=100% 

Additional    labor,    10    hands    (CSyi),    (see 

labor   table)    147^  14% 

Electric   motor,    open    (C3^)    (see   power 

table)    20%  20% 

1  gallon  gasoline  not  in  approved  safety  can     10%  10% 

Total   occupancy   charge 109%  144% 

As  illustrated  in  the  example  under  construction  these  charges 

52 


arc  added  to  other  dcticicncy  charges  in  figuring  the  rate  on  build- 
ing. This  results  in  a  rate  of  $2.10  on  the  brick  and  $2.43  on  the 
brick-vencercd.  As  the  contents  of  the  brick-veneered  building 
without  fire  protection  (D2)  take  the  same  rate  as  building,  $2.43 
will  also  be  the  rate  on  contents.  The  rate  on  the  contents  of  the 
brick  building  is  obtained  by  adding  to  the  building  rate  the  average 
contents  differential  for  a  D2  contents  (see  occupancy  list)  located 
in  the  basement  and  on  the  first  to  fifth  floors  inclusive,  as  follows 
(see  contents  tabic):  $0.23+.144-.23+.29+.29+.29=1.47^6=.24.  This 
added  to  $2.10  gives  $2.34. 

We  have  seen  how  the  Analytic  System  rates  an  unexposed 
and  unprotected  building  and  contents.  We  have  become  familiar 
with  its  methods  of  operation  governing  construction  and  occupancy. 
There  still  remains  for  consideration  its  treatment  of  protection 
and  exposure.  In  the  third  paper  we  shall  begin  where  we  stop 
tonight  with  the  rate  on  the  unexposed  and  unprotected  building 
and  contents,  and  carry  it  through  until  we  obtain  the  rate  with 
fire  protection  both  public  and  private  and  also  with  exposures 
from  other  buildings. 


5? 


PROTECTION  AND  EXPOSURE. 

February  23,   1909. 

In  our  study  of  the  Analytic  System  as  a  system  for  meas- 
urement of  tire  hazard  we  have  already  seen  that  it  recognizes 
the  factors  of  place  and  time — that  is,  the  different  experience  in 
different  localities  and  the  changing  experience  from  year  to  year — 
by  the  proper  selection  or  changing  of  basis  rates  without  dis- 
turbing the  internal  or  external  relations  of  the  rates  themselves. 
We  have  said  that  it  recognizes  all  the  influences  in  or  about  a 
building  under  the  four  items  of  Construction,  Occupancy,  Pro- 
tection and  Exposure.  We  have  entered  into  somewhat  lengthy 
explanation  of  its  treatment  of  the  elements  of  Construction  and 
Occupancy.  We  have  seen  how  this  treatment  works  into  the 
finished  rate  on  the  building  standing  unprotected  and  unexposed. 
There  remains  the  treatment  of  Protection  and  Exposure  to  make 
our  study  complete. 


PROTECTION. 

The  many  methods  of  protection  against  fire  are  classed  as 
public  and  private.  With  reference  to  public  protection  all  of  the 
buildings  within  reach  of  that  protection  are  given  the  same  per- 
centage credit.  With  reference  to  private  protection  each  building 
is  given  the  credit  to  which  the  private  devices  of  protection  in- 
stalled in  that  building  entitle  it.  Public  protection  is  general ; 
private  is   individual. 

Classification   of  Public   Protection. 

Before  any  adequate  method  of  recognition  of  public  protec- 
tion in  the  rate  can  be  formulated,  we  must  seek  some  classifica- 
tion of  such  protection.  You  will  find  no  classification  of  public 
protection  in  the  Analytic  System.  It  is  content  with  the  state- 
ment, "Municipal  protection  is  divided  into  seven  grades  to  con- 
form to  the  *  *  *  classification  by  the  Western  Union."  If  we 
turn  to  this  classification  we  find  a  necessarily  elaborate  pamphlet 
dividing  all  cities  and  towns  into  seven  classes,  which  we  may 
roughly  define  as  follows : 

First  Class. 
Waterworks.     Gravity,  combined  or  direct  pressure  system,  with 
reservoir  or  standpipe,  pumps  and  boilers  of  specified  capacity  and 
with  pumping  station,  pressure,  mains,  gate  valves  and  hydrants    as 
specified.     Approved   hish   pressure   system. 

54 


Fire  Department.  Equipment  of  apparatus,  full-paid  men,  hose 
and  telegraph  lire  alarm  system  as  specified. 

Ordinances.  Approved  building,  electrical  and  general  ordi- 
nances.    Streets  of  standard  width,  paved  and  lighted. 

Second  Class. 

Waterworks.  Same  as  first  class,  except  pumping  station 
may  be  brick  instead  of  "fire  resistive,"  and  a  slight  '  deficiency 
may  exist  in  location  of  gate  valves.     No  high  pressure  system. 

Fire  Department.  Same  as  first  class,  except  requirement  for 
number  of  men  may  be  reduced  as  specified. 

Ordinances.  Same  as  first  class,  except  that  wires  need  not 
be  installed  in  underground  conduits. 

Third   Class. 

Waterworks.  Pressure  mains  and  hydrants  same  as  first  class. 
Other  requirements  not  less  than  75  per  cent,  of  first  class.  Force 
mains  need  not  be  in  duplicate.  Pumping  station  same  as  second 
class. 

Fire  Department.  Same  as  first  class,  except  requirement  for 
number  of  men  may  be  reduced  as  specified.  Fire  alarm  system 
need  be  only  75  per  cent,  of  first  class. 

Ordinances.  Suitable,  but  without  special  supervision.  Streets, 
however,  to  be  same  as  first  class. 

Fourth  Class. 

Waterworks.  System  may  be  50  per  cent,  of  first  class,  mains 
and  hydrants  slightly  deficient,  but  pressure  standard. 

Fire  Department.  Organized  and  well-drilled  volunteer.  To 
be  paid  for  services  rendered.  Not  less  than  one  hook  and  ladder 
truck  and  one  hose  reel  with  1,500  feet  of  standard  hose,  drawn 
by  horses.     Satisfactory  telephone  system   for  fire  alarm. 

Ordinances.  Same  as.  third  class.  Streets  same  as  first  class 
in  business  district. 

Four  and  One-Half  Class. 
Waterworks.     System  not  up  to  standard  of   fourth  class. 
Fire    Department.     Slightly    delkient    from    fourth    class. 
Ordinances.     None. 

Fifth  Class. 

Waterworks.     None. 

Fire  Department.  X'oluntccr  with  one  hand  engine,  500  feet 
of  standard  hose  and  public  cisterns.  .\  double-tank  chemical 
engine  may  be  used  in  place  of  a  hand  engine. 

Ordinances.     None. 

55 


Sixtli    Class. 
No  fire  protection. 

Credit  on  Building  Rates. 

With  tills  classification  before  us,  we  turn  to  the  Analytic  Sys- 
lom  to  discover  its  method  of  treatment.  An  examination  of 
previous  schedules  reveals  an  average  rate  as  made  by  them  on 
frame  buildings  under  full  city  protection  equal  to  about  two-thirds 
or  66  2-3  per  cent,  of  the  average  rate  on  frame  buildings  without 
protection.  In  the  case  of  brick  buildings  the  hazard  under  city 
protection  is  about  55  per  cent,  of  that  without  protection.  This 
relation  is  equalled  approximately  under  the  Analytic  System  by 
successive  discounts,  from  the  rate  without  protection,  of  8  per 
cent  for  each  class  of  protection  in  the  case  of  frame  buildings, 
and  of  13  per  cent,  in  the  case  of  brick  buildings.  Instead  of  mak- 
ing this  discount  from  the  final  rates,  however,  which  would  necessi- 
tate a  separate  figuration  for  each  building,  the  discount  is  made 
from  the  basis  rates  and  a  basis  rate  table  established.  This  opera- 
tion makes  unnecessary  a  separate  figuration  for  each  building  and 
produces  the  same  result  as  the  discount  from  the  final  rate,  due 
to  the  fact  already  stated  that  a  percentage  change  in  basis  rate 
produces  a  like  change  in  the  final  rate. 

An  illustration  of  this  figuration  as  applied  to  the  actual  forma- 
tion of  a  basis  rate  table  will,  perhaps,  make  this  clear  to  you. 
Assume  the  brick  basis  rate  without  protection  to  be  $1.00.  If 
we  were  to  discount  this  amount  regularly,  13  per  cent,  for  each 
class  as  noted  above,  we  would  simply  divide  $1.00  by  113  per  cent., 
the  resulting  amount  by  113  per  cent.,  etc.  This  has  been  done, 
except  in  the  case  of  the  basis  rates  for  four  and  one-half  and  fifth 
classes.  The  protection  of  fifth  class  is  considered  worth  only  a 
credit  of  one-half  of  13  per  cent.,  and  the  basis  rate  is,  therefore, 
made  the  average  between  the  sixth  class  basis  rate  and  the  figure 
obtained  by  the  first  discount  of  13  per  cent.  Thus  $1. 00-^1. 13=.88; 
1.00+.88=:1.88-^2=.94.  The  differences  between  the  protection  of 
fifth  class  and  four  and  one-half  class  and  between  four  and  one- 
half  class  and  fourth  class  are  considered  worth  three-fourths  of  a 
class  respectively.  The  four  and  one-half  class  basis  is  thus  half 
way  between  fourtli  and  fiftli  class  basis  rates  and  is  obtained  by 
taking  the  average  of  same.  As  the  fourth  class  basis  rate  is  two 
classes  or  two  discounts  of  13  per  cent,  removed  from  the  sixth 
class  basis,  it  is  obtained  thus:  1.00^1. 13=:.88;  .88^1.13=.78.  The 
four  and  one-half  class  basis  rate  is  therefore  .94+.78=1.72-^2=.86. 
The  third  class  basis  rate  is  obtained  by  figuring  a  discount  of  13 
per  cent,  from  fourth  class ;  second  class,  by  the  same  discount  from 

56 


third  class,  etc.     The  l)rick  basis  rate  table   No.   100  for  a   1-story 
building  is  thus  figured  and  shown  herewith: 

Class    Class     Class     Class     Class     Class     Clas." 
12  3  4  4/256 

1    story    $0.54     $0.61      $0.69     $0.78     $0.86     $0.94     $1.00 

As  explained  under  our  treatment  of  height  in  the  paper  on 
Construction,  the  basis  rates  are  increased  for  each  story  over  one. 
In  the  formation  of  the  tables  this  increase  was  applied  to  the  sixth 
class  basis  rate,  and  the  discounts  described  above  then  applied  to 
the  resulting  basis  rates  for  buildings  of  various  heights.  This 
resulted  in  the  following  table  as  it  appears  in  the  schedule; 

Brick  Basis  Table  No.  100.    . 
Class     Class     Class     Class     Class     Class     Class 
1  2  3  4         4^  5  6 

1  story    $0.54  $0.61  $0.69     $0.78     $0.86     $0.94     $1.00 

2  stories  57  .64  .72,  .^2         .91         .99       1.05 

3  stories  O)  .67  .76  .86         .95       1.04       1.10 

4  stories  63  .72  .81  .92       1.01       1.10       1.17 

5  stories  69  .78  .88 

6  stories  76 

Increase  for     each 

additional   story..     .12         .12         .12         .12         .12         .12         .12 
Decrease  if  no  base- 
ment     03         .03         .04         .04         .04         .05         .05 

A  series  of  basis  rate  tables  ranging  from  No.  60  up  to  No.  120 
was  then  figured  from  the  100  table  by  taking  fixed  percentages  of 
it.     Thus  the  60  table  is  60  per  cent,  of  the  100  tabic,  etc. 

Frame  basis  rate  table  No.  100  was  figured  in  the  same  way  as 
brick  table  No.  100,  except  that  the  discount  of  8  per  cent,  was 
used  in  place  of  13  per  cent.  The  series  of  frame  tables  ranging 
from  No.  90  up  to  No.  250  was  then  constructed.  Frame  basis  rate 
table  No.  100  appears  thus : 

Frame  Basis  Table  No.  100. 
Class     Class     Class     Class     Class     Class     Class 
1  2  3  4         4/,  5  6 

1  story    $0.68     $0.74     $0.79     $0.86     $0.91     $0.96     $1.00 

2  stories   71         .78         .83         .90         .96       1.01       1.05 

3  stories   76         .^i         .88         .96       1.02       1.08       1.12 

We  now  have  two  series  of  basis  rate  tables,  one  for  brick  and 
one  for  frame,  by  means  of  which  we  not  only  give  proper  credit 
for  public  fire  protection  and  proper  charges  for  height,  but  also 
by  proper  selection  of   which    for  any  state  we  can  make  rates  at 

57 


the    level    which    experience  justifies.     The    selections    of    the   brick 
and  frame  tables  arc  entirely  independent  of  each  other. 

"Starred"  Risks. 

A  compari.son  of  the  basis  rate  tables  given  above  will  show 
that  less  credit  is  given  a  frame  building  for  public  fire  protec- 
tion than  is  given  a  brick  building.  This,  of  course,  must  be  true, 
since  the  discount  for  brick  was  13  per  cent,  and  for  frames  8  per 
cent.  When  the  building  is  filled  with  a  stock  which  burns  rapidly 
and  fiercely,  such  as  hay,  it  is  not  considered  entitled  to  as  much 
credit  for  public  protection  as  the  building  with  the  usual  occupancy. 
The  fire  department  finds  the  fire  well  under  way  upon  arrival  and 
fire  protection  is  less  efifective  against  the  intense  heat.  Buildings 
containing  such  occupancies  are  called  "starred  risks"  for  the  reason 
that  such  occupancies  in  the  alphabetical  lists  are  designated  with 
a  star  to  show  that  when  found  in  a  building,  that  building  shotild 
receive  less  credit  for  fire  protection.  As  this  principle  was  already 
used  in  the  different  discounts  in  the  case  of  brick  and  frame 
buildings,  it  was  decided  to  give  brick  starred  risks  one-third  less 
credit  than  brick  buildings  of  regular  occupancy,  and  frame  starred 
risks  one-half  the  credit  allowed  frame  buildings  of  regular  occu- 
pancy. This  amounts  to  a  discount  for  each  class  of  public  pro- 
tection of  about  8  per  cent,  fur  brick  and  4  per  cent,  for  frame 
starred  risks.  Instead  of  constructing  new  basis  tables  along  thtse 
lines,  as  would  have  been  entirely  possible,  scales  of  increase  of 
the  regular  brick  and  frame  basis  were  provided,  which  produced 
approximately  the  same  results.  These  scales  of  increase  are  placed 
immediately  preceding  each  occupancy  list.  When  a  starred  risk 
such  as  a  hay  barn  is  to  be  rated,  the  regular  basis  rate  can  be  in- 
creased by  the  percentage  gi\cn  for  the  class  of  protection  which 
applies,  and  used  as  a  new  basis   rate. 

Credit  on  Contents  Rates. 

In  the  matter  of  difference  between  rate  on  buildings  and  on 
contents,  the  Analytical  System  considers  that  public  fire  protec- 
tion should  play  a  part.  As  already  pointed  out  in  the  discussion 
of  contents,  statistics  show  that  the  better  the  fire  protection,  the 
greater  the  relative  loss  on  contents  as  compared  to  building. 
Whereas  in  unprotected  towns  statistics  may  show  a  loss  on  con- 
tents of  brick  buildings  slightly  in  excess  of  the  loss  on  buildings, 
they  show  in  first  class  cities  a  loss  on  contents  greatly  in  excess 
of  that  on  buildings.  This  is  due  partly  to  the  superior  construc- 
tion   of   buildings   under    the    better   grades   of   protection   and   the 

58 


ability  of  the  firemen  to  extinguish  the  fire  with  small  loss  to  tlic 
l)uilding,  also  to  the  increased  value  of  stocks  subject  to  one  fire 
as  well  as  the  greater  loss  by  water  under  higher  grades  of  pro- 
tection. This  simply  means  that  stocks  should  not  receive  as  much 
credit  for  fire  protection  as  do  buildings;  that  the  contents  differ- 
ential should  increase  as  the  protection  is  improved. 

With  these  ideas  in  mind  the  tables  of  contents  differentials 
were  constructed,  as  we  have  partially  described  under  our  treat- 
ment of  Damagcability.  In  an  unprotected  town  where  the  hazard 
of  the  building  was  assumed  as  represented  by  a  rate  of  $1.00,  the 
relative  hazard  of  contents  of  different  grades  of  damagcability 
was  regarded  as  represented  by  a  rate  of  $1.10  on  a  Dl  stock,  $1.20 
on  D2,  $1.40  on  D3,  and  $1.60  on  a  D4  stock.  Whereas  the  hazard 
of  a  brick  building  was  discounted  13  per  cent,  for  each  grade  of 
public  fire  protection,  a  Dl  stock  was  discounted  5  per  cent,  D2  2  per 
cent.,  D3  1  per  cent.,  and  D4  0  per  cent.  Rates  on  stocks  for  each 
class  of  damagcability  under  each  grade  of  protection  were  thus  fig- 
ured, and  when  the  rale  on  l)uilding  for  each  class  was  subtracted, 
resulted  in  a  table  of  contents  differentials.  The  grades  DlJ/^,  D2y2 
and  D3'/2  were  figured  halfway  between  the  regular  grades.  The 
additions  for  location  of  stock  in  basement  or  above  grade  floor 
were  then  applied  as  already  described  under  damagcability  and 
contents  table  Xo.  100  thus  figured.  Tables  ranging  from  No.  60 
to  No.  95  were  tlicn  computed  by  taking  a  constant  percentage,  for 
each  table,  of  the  100  contents  table.  In  actual  practice  the  selec- 
tion of  the  proper  table  is  made  by  experience.  The  same  table  is 
used  for  all  classes  of  towns  in  a  given  State.  A  diagram  showing 
Contents  Table  No.  70  for  sixth  class  has  already  been  shown  under 
our  treatment  of  damageal)ility,  Init  by  way  of  further  illustra- 
tion, I  give  you  that  part  of  the  same  taljlc  whicli  applies  to  first 
class  cities. 

Contents  Table  No.  70.     First  Class  Protection. 

Dl  DIK'     D2  D2'/'     D3  D3;{'  D4 

Basement  $0.30  $0.39    $0.47  $0.57    $0.66  $0.76  $0.86 

Ground    fioor 22  .30  .38  .47  .55  .65  .74 

Second    floor 30  .39  .47  .57  .66  .76  .86 

Third    floor 35  .44  .53  .63  .72  .83  .9^ 

Fourth    floor 40  .50  .59  .69  .79  .90  1.01 

Fifth  floor 45  .55  .65  .76  .86  .97  1.08 

Sixth  floor 51  .61  .71  .82  .93  1.05  1.16 

Seventh  floor 56  .67  .77  .89  1.00  1.12  1.24 

Eighth  floor  and  over..     .61  .72  .83  .95  1.06  1.19  1.31 

59 


As  the  contents  differential  is  thus  shown  to  be  an  expression 
of  the  difference  in  hazard  between  buildings  and  contents,  the 
differential  in  starred  risks  under  protection  should  be  less  than 
in  ordinary  risks.  This  is  obvious  since  the  less  the  credit  given 
for  protection  the  smaller  the  differential,  and  a  starred  risk,  as 
already  stated,  receives  less  credit  for  protection  than  an  ordinary 
risk.  The  amount  of  deductions  was  easily  figured  for  each  class 
of  protection  and  the  amount  placed  at  the  head  of  each  class  under 
each  table.  The  notation  under  Contents  Table  No.  70,  first  class, 
shown  above,   for  instance,  reads:    "Deduct  11   cents   for   star". 

The  above  remarks  on  contents  differential  also  apply  in  the 
case  of  frame  buildings,  but  to  a  lesser  degree.  Since  the  frame 
building  is  more  damageable  and  receives  less  credit  for  protection 
than  the  brick,  the  contents  differential  should,  of  course,  be  smaller. 

The  schedule  for  the  present  at  least,  contents  itself  with  the 
provision  of  one  frame  contents  table.  .Although  the  differentials  in 
this  table  are  not  figured  as  exactly  as  in  the  case  of  brick  tables, 
they  can  be  so  figured  in  case  the  margin  of  profit  on  such  con- 
tents makes  a  closer  analysis  necessary  in  the  future. 

Frame  Contents  Table. 


D.  1  &  IM 

D.  2  &  2!4 

D.  3  &  3V4 

D.  4 

In  towns  of  classes  5  and  6 

10c 

14c 

In  towns  of  classes  4  and  4^ 

13c 

17c 

In  cities  of  class  3 

8c 

16c 

20c 

In  cities  of  classes  1  and  2 

14c 

20c 

2.=^c 

Private  Protection. 

Having   thus    seen    iiow    the    schedule    gives    proper    credit    for 
public  protection,  we  turn  next  to  private  protection.     Public  pro- 
tection deals  with  waterworks,  fire  department  and  city  ordinances. 
Private  protection  deals  with  inside  standpipes,  watchman,  chemical 
extinguishers,   etc.     In   the    former  case,   the   same   credit   is   given 
all  buildings  reached  by  the  protection,  in  the  shape  of  a  percentage 
discount    from   the   basis   rates,    resulting   in   the    establishment    of 
basis  rates  for  that  city.     In  the  case  of  private  protection,  credit 
is  given  only  to  those  buildings  which  are  protected.     This  credit 
is   a  percentage   of   the   final    rate   of   building    (not   including   ex- 
posures).    Although  applied  in  different  places,  a  moment's  reflec- 
tion  will   convince   you   that   the    results   of   the   two   methods   are 
identical.     The   credit    for    private    protection    applies    to    the    final 
rate   for  convenience  only.     Without   needless   explanation,    I   give 
you  the  following : 


60 


Tabic  of  Credits  for  Protective  Features   (Private;. 

1.  Inside  standpipc  and  hose 5% 

2.  Outside   fire  escape  and   standpipes   on   buildings  3-stories 

and  over    4% 

3.  Automatic   fire  alarm   system 10% 

4.  Chemical  extinguishers  or  casks  and  pails 5% 

5.  Watchman   with   approved   clock 5% 

6.  Watchman   reporting  to  central   station 10% 

8.  Heat  from  outside  source  or  no  heat 5% 

9.  Approved  whitewash  or  fire-proof  paint  on  all  exposed  in- 

terior  woodwork    2% 

EXPOSURES. 

Up  to  the  present  we  have  considered  all  buildings  as  standinc: 
entirely  alone.     In  very  few  instances,  however,  do  we  find  builtl- 
ings  so  situated  as  not  to  be  aflfected  by  the  burning  of  surround- 
ing  buildings.      Wc   live    in    cities    and    we   erect    our   buildings   in 
large  groups,  so  crowded  together  that  too  often  a  fire  in  one  build- 
ing results  in  a  conflagration.     We  must  make  rates  for  a  gregari- 
ous people.     The  measurement  of  this  hazard  is  a  difficult  one,  and, 
strange  to  say,  was  the  problem  which  gave  birth  to  the  Analytical 
System.     Mr.  Dean  did  not  wish  to  formulate  a  schedule  of  rating. 
His   original   intention   was   to   devise   some   means   of   making  ex- 
posure charges,  to  offer  some  defensible  scheme  of  measuring  ex- 
posure hazard.     Many  previous  schedul&s  were  silent  on  this  vital 
point;  others  merely  offered  crude  tables  of   charges.     The   insur- 
ance business  needed   some  method  of   treatment  that   would   give 
the  companies  adequate  return   for  the  liability  assumed  and  offer 
defensible  inducement  for  the  removing  of  exposure  hazard  by  pro- 
tection of  openings  and  erection  of  fire  w-alls.     After  he  had  formu- 
lated  his   exposure    rules   he    wished   them   tested,   and.    finding  no 
tariff    for    frame    buildings    working    satisfactorily    enough    to   give 
adequate  tests,   he  devised  and   printed   with  the  exposure   rules  a. 
simple   frame  tariff.     This   was   first  tested  in   the   small  towns   of 
Illinois  in  the  latter  part  of  1902.     For  about  a  year  the  schedule 
consisted  of  a  small  pamphlet  of  forty  pages  printed  in  the  back  part 
of  the  Minimum  Tariff  of  the  Illinois  State  Board  of  Fire  Under- 
writers.    It  contained  no  provision  for  brick  buildings,  the  Illinois 
State  Board  Tariff  providing  for  that  class.    The  schedule  for  brick 
buildings  was  then  added,  and.  later  still,  the  frame  schedule  was 
revised   along  the  lines   of   the  newer   brick.     Slowly   the   schedule 

61 


grew,  and  as  it  grew  it  came  into  use  more  widely.  From  its  start 
in  the  small  towns  of  Illinois  it  spread  to  other  States  and  to  the 
larger  towns.  Today  it  is  used  throughout  the  entire  Middle  West, 
from  Nebraska  to  West  Virginia,  and  from  Minnesota  to  Tennes- 
see, and  in  all  tlie  larger  towns  and  big  cities,  with  but  few  excep-' 
tions.  The  Analytic  System  did  not  spring  forth  complete,  like 
Minerva,  fully  armed,  from  the  head  of  Jupiter.  It  has  been  a 
growth,  a  process  of  .evolution.  In  its  growth  it  has  truly  been 
tested  with  fire  as  no  other  schedule  has  ever  been.  This  growth 
is  not  complete  even  now.  Evolution  docs  not  stop.  The  schedule 
is  not  perfect ;  I  could  point  out  many  faults.  But  the  principle 
is  there  and  remains  unchanged,  always  ready  to  be  called  upon  to 
give  what  help  it  can  to  place  our  business  upon  a  sound  and  uni- 
form foundation. 

Mr.  R.  ]\I.  Bissell,  in  his  lectures  before  Yale  University,  makes 
the  statement  that  28  per  cent,  of  all  losses,  both  as  to  number  and 
value,  is  due  to  exposure  fires.  To  provide  a  proper  method  of 
treatment  for  so  important  an  clement  of  fire  hazard  and  a  scientific 
analysis  of  so  complicated  a  problem  was  the  task  Mr.  Dean  set 
for  himself  in  the  formation  of  the  exposure  formulae.  Mr.  Bis- 
sell says  that  these  formulae  "will  come  to  be  recognized  as  ex- 
hibiting the  most  satisfactory,  logical  and  adequate  treatment  known 
up  to  this  time,  of  this  highly  complex  and  hitherto  maltreated 
department  of  the  science  or  business  of  making  rates  for  mercan- 
tile risks." 

Three  Kinds  of  Exposure. 

Mr.  Dean  did  not  attempt  to  use  philospohy  in  this  work,  but 
merely  common  sense.  He  said  that  all  buildings  "radiate"  a  part 
of  their  own  hazard  to  other  buildings,  "absorb"  a  part  of  the  haz- 
ard of  other  buildings,  and  "transmit"'  a  part  of  the  hazard  ab- 
sorbed from  buildings  on  one  side  or  in  one  direction  to  buildings 
on  the  opposite  side  or  in  another  direction.  lie  said  that  the  ex- 
tent to  which  buildings  radiate,  absorb  and  transmit  hazard  depends 
upon  the  fire  protection  of  the  city  or  town,  upon  the  construction 
of  exposing  and  exposed  walls,  and  upon  the  distance  between  the 
exposing  and  exposed  walls. 

Three  Factors  of  Exposure. 

Exposure  must  necessarily  start  with  the  rate  on  the  exposing 
building,  for  that  rate  measures  all  the  hazard  of  that  building 
and  its  occupancy,  including  all  features  of  wall  construction,  floor- 

62 


way  openings,  furnaces,  puljlic  and  private  protection,  etc.  The 
ratio  of  this  liazard  wliicli  is  radiated  from  the  building  depends 
upon  the  proportion  of  fires  suppressed  in  the  building,  and  this  in 
turn  depends,  as  stated  first,  upon  the  public  fire  protection.  In 
fifth  and  sixth-class  towns,  the  average  of  this  ratio,  as  found 
in  existing  tariffs  for  frame  buildings  exposing  frame  buildings,  is 
about  40  per  cent.  As  the  fire  protection  improves,  it  will  be  con- 
ceded that  this  ratio  should  decrease,  and  therefore  33  1/3  per  cent. 
is  used  in  fourth  and  four-and-a-half  class  towns,  and  30  per  cent. 
in  first,  second  and  third  class.  The  amount  in  dollars  and  cents 
obtained  by  taking  40  per  cent.,  33  1/3  per  cent,  or  30  per  cent,  of 
the  rate  of  the  exposing  building,  as  the  case  may  be,  is  called  the 
Exposure  Standard,  because  it  is  the  amount  obtained  by  the  use  of 
a  ratio  which  is  uniform  for  all  classes  of  buildings  under  each 
grade  of  protection. 

The  construction  of  the  facing  walls  of  the  exposing  and  ex- 
posed buildings  next  plays  its  part.  In  towns  of  grades  4,  4J/2,  5 
and  6  the  entire  exposure  standard  figured  above  applies  in  the 
case  of  frame  buildings  exposing  frame  buildings.  As  the  con- 
struction of  either  or  both  buildings  becomes  better,  only  part  of 
this  standard  should  apply.  Accordingly  graded  decimal  ratios  of 
the  standard  are  provided  for  all  possible  combinations  of  con- 
struction in  exposing  and  exposed  buildings,  ranging  from  "all"  or 
ten-tenths  for  frame  building  exposing  frame  building  down  to 
zero  for  a  brick  fire  wall  exposing  another  brick  fire  wall. 

The  use  of  the  proper  decimal  ratio  of  the  exposure  standard 
gives  us  the  amount  of  exposure  to  be  absorbed  by  the  exposed 
building,  provided  exposing  and  exposed  building  are  situated  im- 
mediately adjoining.  Should  clear  space  be  found  between  the  two 
buildings,  this  amount  must  be  still  further  reduced,  the  amount 
of  reduction  depending,  of  course,  not  only  upon  the  distance,  but 
also  upon  the  construction.  The  reduction  for  space  should  be 
greater,  the  better  the  construction.  Graded  fractional  reductions 
for  each  ten  feet  clear  space  are  therefore  provided  for  the  same 
combinations  of  construction  in  exposing  and  exposed  buildings, 
as  are  provided  in  the  case  of  the  decimal  ratios. 

These  two  methods  of  reduction  for  construction  and  for  space 
by  means  of  decimal  ratios  and  fractions,  respectively,  are  pre- 
sented for  convenience  in  the  form  of  a  general  exposure  table. 
as  follows : 

63 


General   Exposure  Table. 
For  use  in  ton'n  of  grade  4,  4^,  5  or  6. 


E  xp  o  s  in 

g  B 

uild 

tncrs. 

Frame 

Frame 

or 
I.C.Ho.1 

I.e. 

No.  2 

or 
Ske)«- 
tonl.C. 

BRICK 

VENEERED 

BRICK 

SHINGLE 

ROOF 

Briok 
Matal 

Roof 

B.V. 
No.  1 

B.V. 

No.  3 

B.V. 
No.  3 

c. 

No.l 

c. 

No.  3 

B. 

No.l 

All 

See 
Frame 
TabJe 

All 

All 

.7 

.6 

.5 

.4 

.3 

Vz 

Iron  Clad 

No>  1    With  exposed  openlnffs 

All 

V5 

All 

AU 

'4 

.6 

'4 

.5 

A 

.3 

.3 

Vz 

No>  2    Without  exposed  open 

Ings 

All 

All 

AU 

.5 

.4 

.3 

K 

.3 

.2 

Brick  Veneered 

No.  1     With  shingle  root  or 
wooden  mansard 

All 

Ve 

AU 

All 

% 

.6 

.5 

.5 

.3 

.3 

No.  2    With  metal  roof  and 
no  parapet  or  with  unpro- 
tected openings 

.7 

.6 

.6 

.5 

.4 

.3 

.2 

.2 

c 

No.  3     With  metal  roof  and 
parapet  12  in.  high.    No  un- 
protected openings. 

.6 

.5 

M 

.5 

.5 
.5 

.3 

.2 

.2 

.0 

.0 

Brick  Shingle  Roof 

No.  1    Wooden   mansard   or 
shingle  roof  sloping  to  wards 
exposure 

.6 

.4 

.4 

.4 

.3 

.3 

No.  2    Shingle  roof  and  para- 
pet wall  with  unprotectod 
openings 

.5 

.5 

.4 

.3 

.3 

.3 

.3 

.2 

^2 

No.  3    Shingle  roof  and  para- 
pet wall,  all  openings  pro- 
tected 

W.D. 

W.D. 

W.D. 

.0 

.0 

.0 

.0 

.0 

Brick  Metal  Roof 

No.  1    Wall  without  parapet 
or  with  unprotected  open- 
ings 

.4 

.4 

.3 

.3 

.2 

.3 

.2 

.2 

No.  2    Parapet  wall,  all  open- 
ings protected 

W.D. 

W.D. 

W.D. 

.0 

.0 

.0 

.0 

.0 

At  the  top  of  this  table  you  will  note  under  the  list  of  expos- 
ing buildings  the  names  of  all  kinds  of  buildings  from  frame  to 
brick.  The  numbers  under  each  class,  such  as  brick-veneered  No.  1. 
No.  2  and  No.  3,  are  used  to  designate  the  different  types  of  con- 
struction of  that  class,  which,  of  course,  are  defined.  Brick-veneered 
No.  1,  for  instance,  is  defined  as  a  brick-veneered  building  "with 
shingle  roof  or  wooden  mansard :"  lirick-veneered  No.  2  as  a 
brick-veneered  building  "with  metal  roof  and  no  parapet,  or  with 
unprotected  openings,"  and  brick-veneered  No.  3  as  a  brick-veneered 
building  "with  metal  roof  and  parapet  twelve  inches  high  and  with 
no  unprotected  openings." 

64 


At  the  left-hand  side  of  this  table  you  will  note  the  same  list 
of  buildings  as  "exposed  buildings,"  except  with  the  addition  of 
"C.  No.  3"and  "B.  No.  2"  buildings.  A  "C.  No.  3"  building  is  de- 
fined as  a  brick  building  with  a  "shingle  roof  and  parapet  wall,  all 
openings  protected,"  and  a  "B.  Xo.  2"'  building  as  a  brick  build- 
ing with  a  metal  roof  and  parapet  wall,  all  openings  protected. 
These  two  classes  were  not  included  in  the  headings  at  the  top  of 
the  table  for  the  reason  that  they  are  not  considered  as  radiating 
any  exposure. 

Under  the  name  of  the  class  which  applies  to  the  construction 
of  the  exposing  building  and  on  a  level  with  the  name  of  the  class 
which  applies  to  the  construction  of  the  exposed  building  will  be 
found  the  proper  decimal  ratio  to  be  applied  to  the  exposure 
standard  whenever  that  combination  in  construction  of  exposing 
and  exposed  l)uildings  is  found.  And  immediately  under  the  deci- 
mal ratio  will  be  found,  in  each  case,  the  fraction  which  designates 
what  part  of  the  exposure  charge  thus  figured  is  to  be  deducted 
for  each  ten  feet  clear  space  between  exposing  and  exposed  build- 
ings for  the  same  combination  of  construction.  If,  for  instance, 
a  "B.  V.  No.  2"  building  exposes  a  frame  building  we  find  under 
"B.  V.  Xo.  2"  and  on  a  level  with  "frame"  the  decimal  .7  and 
fraction  14  ;  but  if  a  "B.  V.  Xo.  2"  building  exposes  a  "C.  Xo.  2" 
building  we  find  the  decimal  .3  and  the  fraction  1/3.  If  the  rate 
on  the  "B.  V.  No.  2"  building  were  $2.00,  the  percentage  used  to 
figure  the  exposure  standard  40  per  cent,  and  the  clear  space  be- 
tween the  exposing  and  exposed  building  20  feet,  the  exposure 
standard  of  the  radiated  exposure  of  said  building  would  be  40 
per  cent,  of  $2.00,  or  80  cents.  The  exposure  charge  from  it  to  the 
frame  building  would  be  seven-tenths  of  80  cents,  or  56  cents, 
less  2/4  for  20  feet  space,  leaving  28  cents;  and  the  charge  from  it 
to  the  "C.  No.  2"  building  would  be  three-tenths  of  80  cents,  or 
24  cents,  less  2/3  for  20  feet  space,  or  8  cents. 

It  is  interesting  to  note  in  passing  that  this  table  covers  any 
one  of  88  combinations  of  construction  in  exposing  and  exposed 
buildings,  whicli  gives  one  some  idea  with  what  completeness  the 
.Analytic  System  provides  for  that  element  of  fire  hazard  which,  at 
the  best,  has  received  but  scant  treatment  in  previous  schedules. 

Where  the  zero  appears  in  the  table,  no  exposure  charge  is  to 
be  made.  Where  the  letters  "W.  D."  appear,  the  charge  is  to  be 
made  by  the  rules  for  "wall  damage."  which  will  be  discussed 
later.  Where  the  word  "All"'  appears,  no  decimal  reduction  of  the 
exposure  standard  is  to  be  made,  the  only  reduction  being  for  clear 
space.  Where  a  frame  or  "I.  C.  No.  1"  building  exposes  a  frame 
building,  you  will  notice  no  fraction  is  given,  but  the  words  "see 

6S 


frame  tabic"   are  inserted.     This   refers  to  a  special   table  covering 
reductions  for  space  between  frame  buildings  as  follows : 

Decimal 
Ratio  of 

Distance  between  buildings —  Standard. 

Under   15    feet All 

15  feet  and  under  20  feet 9 

20  feet  and  under  25  feet 7 

25  feet  and  under  30  feet 6 

30  feet  and  under  35  feet 5 

35  feet  and  under  40  feet 4 

40  feet  and  under  45  feet 3 

45  feet  and  under  50  feet 2 

50  feet  and  under  60  feet 1 

60  feet    0 

In  cities  of  classes  1,  2  and  3  practically  the  same  methods  are 
followed.  The  General  Exposure  Table  given  above  is  slightly 
changed,  however,  by  substituting  the  decimal  ".8"  wherever  the 
word  "All"  appears,  and  placing  the  fraction  1/5  where  the  words 
"See  Frame  Table"  appear.  The  latter  change  removes  the  neces- 
sity for  the  separate  frame  table  and  none  is  given  for  cities  of 
these  three  classes. 

Illustrations  of  Exposures. 

With  this  explanation  of  the  general  exposure  table  we  turn 
to  examples  illustrating  its  actual  use  in  a  few  of  the  many  com- 
plicated situations  that  arise.  In  these  illustrations  we  shall  use 
various  terms  which  it  seems  best  to  define.  We  quote  from  the 
schedule : 

"When  the  unexposed  rate  of  a  building  has  been  computed 
by  the  *  *  *  brick  or  frame  tariff,  this  rate  is  referred  to  as 
its  individual  rate,  or,  if  building  has  more  than  one  occupancy,  as 
its  omnibus  or  multiple  occupancy  rate. 

"The  amount  added  to  individual  or  omnibus  rate  for  external 
exposure  is  referred  to  as  the  exposure  load. 

"The  individual  or  omnibus  rate  plus  exposure  load  is  the  final 
rate. 

"A  solid  frame  row  is  one  where  the  greatest  cleai'  space  be- 
tween any  two  buildings  is  less  than  15  feet  in  towns  of  class  4, 
4^,  5  or  6. 

"The  highest  rate  (individual  or  omnibus)  in  a  solid  frame  row 
is  referred  to  as  the  nuclear  rate,  because  exposure  charges  are 
added  to  this  as  a  nucleus." 

The  operation  of  figuring  exposure  charges  among  the  build- 

66 


ings  of  a  solid  frame  row  -'s  very  simple.  After  the  rate  on  each 
building  has  been  figured  as  though  it  were  unexposed,  the  ex- 
posure standards  of  all  buildings  in  that  row  (except  the  one  with 
the  highest  individual  or  omnibus  rate)  are  added  to  the  nuclear 
rate  as  defined  above,  and  all  buildings  in  the  row  take  the  result 
as  their  final  rates.  "When  the  final  rate  has  been  established,  the 
exposure  Joad  of  each  building  in  the  row  may  be  found  by  sub- 
tracting its  individual  rate  from  the  final  rate." 

Where  contents  are  located  on  the  ground  floor  of  a  building 
and  are  removable,  the  exposure  load  to  contents  should  obviously 
be  less  than  that  to  building.  There  is  a  possibility  of  removing 
part,  at  least,  of  such  a  stock  of  goods  to  a  place  of  safety  in  the 
case  of  an  exposure  fire,  which  does  not  exist  wiith  reference  to 
the  building.  Such  stocks  as  clothing,  dry  goods,  groceries,  etc., 
are  thus  treated  as  removable  and  are  given  only  70  per  cent,  of 
the  exposure  load  to  building  in  fifth  and  sixth  class  towns,  80  per 
cent,  in' fourth  and  four-and-a-half  class  towns,  and  90  per  cent,  in 
first,  second  and  third  class  towns.  Such  stocks  as  stationery,  drugs, 
music  stores,  etc.,  are  treated  as  semi-removable  and  are  given  80- 
per  cent,  of  the  exposure  load  to  building  in  fifth  and  sixth  class 
towns  and  90  per  cent,  in  fourth  and  four  and  a  half  class  towns. 
The  exposure  lead  to  stocks  is  thus  relatively  increased  under  the 
better  grades  because  of  the  increased  probability  of  water  dam- 
age. In  the  case  of  ground  floor  stocks  in  brick  buildings  the  above 
percentages  of  exposure  load  to  building  apply  only  to  the  amount 
of  excess  of  such  exposure  load  over  20  cents. 

For  purposes  of  illustration,  we  present  the  following  example 
in  exposures  of  a  solid  frame  row,  taken  from  the  schedule": 

Solid  Frame  Row. 

Bldtr.         Bldg.  n\iie. 

No.  1         No.  2  No.  3 
Bhick- 

Occupancies—                                                                   Livery,      smith.  Office. 

Individual    rates    $3.00        $2.25  $1.25 

Exposure  40%  of  others  added  to  nuclear  rate  1.40          ....  .... 

Final  building  rates $4.40        $4.40        $4.40 

Individual   rates   subtracted 3.00  2.25  1.25 

Exposure  loads  to  buildings $1.40        $2.15  $3.15 

Exposure  loads  to  removable  contents  (70%) .     .98          ....  .... 

Exposure    loads    to    semi-removable    contents 

(807c) 2.52 

Individual   rates   added 3.00          2.25  1 .25 

Final   rates   on  contents $3.98        $4.40        $3.77 

67 


The  rating  of  an  open  frame  row  presents  added  complications. 
Let  us  assume  20  feet  space  between  buildings  Nos.  1  and  2  and 
also  between  buildings  Nos.  2  and  3.  The  above  solid  frame  row 
then  becomes  an  open  frame  row  and  is  rated  thus : 

Open  Frame  Row. 

Bldg.          Bldg.  Bldg. 
No.  1           No.  2  No.  3 
Black- 
Occupancies                                                                       Livery       .smith.  Office. 

Individual   rates    $3.00        $2.25        $1.25 

Exposure  No.  1  to  others,  40%  of  $3.00  equals 

$1.20,  multiplied  by  70%  for  20  feet  space 

to  No.  2... .84 

And  again  by  70%  for  second  20  feet  space 

to  No.  3 .59 

Exposure  No.  2  to  others,  40%  of  $2.25  equals 

$0.90,  multiplied  by  70%  for  20  feet  space 

to  both  Nos.  1  and  3 63  .63 

Exposure  No.  3  to  others,  40%  of  $1.25  equals 

$0.50,  multiplied  by  70%  for  20  feet  space 

to  No.  2 .35 

And  again  by  70%  for  second  20  feet  space 

to  No.   1 ■ 24  

Final  building  rates $3.87        $3.44        $2.47 

Individual   rates  subtracted 3.00  2.25  1.25 

Exposure  loads  to  buildings $0.87        $1.19        $1.22 

Exposure  loads  to  removable  contents  (70%) .     .61  ....  .... 

Exposure    loads    to    semi-removable    contents 

(80%)    98 

Individual    rates   added 3.00  2.25  1.25 

Final   rates   on   contents $3.61         $3.44        $2.23 

Frame  rows  are  frequently  found  which  we  might  term  as 
"mixed,"  that  is,  consisting  of  part  open  and  part  solid  rows  of 
frame  buildings.  In  such  cases  each  such  solid  row  is  grouped  and 
treated  as  an  individual  building,  as  far  as  exposures  from  other 
buildings  or  rows  are  concerned.  The  exposure  from  it  to  other 
buildings  or  rows  is  based  upon  the  sum  of  the  individual  rates  of 
all  buildings  in  that  row.  Otherwise  the  methods  of  procedure  are 
the  same  as  outlined  above. 

Buildings  other  than  frame  are  divided  into  two  classes,  trans- 
parent and  non-transparent.  Buildings  arc  regarded  as  transparent 
when  all  of  the  exposure  standard  is  used  in  figuring  exposure. 
Such   buildings   arc    designated   by   the   word   ".\n"    in   the  general 

68 


exposure  tabic,  and  are  treated  like  frame  buildings  in  all  respects 
except  that  they  are  classed  as  solid  rows  when  not  separated  by 
10  feet  or  more  instead  of  the  15  feet  used  for  frame  buildings, 
and  that  reductions  for  space  are  made  by  the  fractions  given  in- 
stead of  by  the  frame  exposure  table.  All  other  buildings  are  re-* 
gardtd  as  non-transparent  and  arc  never  grouped  in  solid  rows. 
In  the  case  of  these  buildings  decimal  ratios  of  the  exposure 
standard  arc  provided  by  the  general  exposure  table,  and  reductions 
for  space  are  made  by  the  fractions  given.  We.  illustrate  th'' 
method  of  figuring  exposures  in  such  a  case.  The  distance  between 
buildings  Xos.  1  and  2  is  assumed  as  10  feet  and  between  Nos. 
2  and  3  as  20  feet. 

Xon- transparent  Buildings. 

»      ^  -  ^  a  CO 

-§-  ^    .o  "g 

Construction—  .  t- «  -a  5  .^ 

•  «S  S?  ■  °  °  ■■■;: 

P3  33  03 

Individual  rates  $1.00        $2.00        $1.50 

Exposure  No.  1  to  others,  40%  of  $1.00  equals 

$0.40.  multiplied  by  .2  equals  .08  (B.  No. 

1  to  B.  V.  No.  2)  reduced  J/^  for,  10  feet 

space  -04         .... 

$0.04  multiplied  by  .4  equals  .02  (B.    V. 

No.  2  to  C.  No.  1),  reduced  2/3  for  20 

feet  space   01 

Exposure  No.  2  to  others,  40%  of  $2.00  equals 

$0.80,  multiplied  by   .3   (B.   V.    No.   2  to 

B.   No.   1)   equals   .24  reduced  l4  for  10 

feet  space  12         ....  .... 

$0.80  multiplied  by  .4  (B.  V.  No.  2  to  C. 

No.  1)  equals  .32  reduced  2/3  for  20  feet 

space  ....  .11 

F.xposure  No.  3  to  others,  40%  of  $1 .50  equals 

$0.60,  multiplied  by   .3    (C.    No.    1   to  B. 

V.    No.   2),   equals   .18,    reduced   2/3    for 

20  feet  space .06  .... 

$0.06  multiplied  by   .3   (B.    V.    No.   2  to 

B.    No.    n   equals   .02,  reduced  Jj   for  10 

feet  space    01  ....  .... 


Final  building  rates    $1.13        $2.10        $1.6 

69 


1 


Abnormal  Exposures. 

In  order  to  avoid  confusion,  I  have  purposely  omitted  up  to 
this  time  to  mention  that  all  of  the  foregoing  explanation  of  ex- 
.posurc  charges  applies  to  buildings  of  the  average  area  and  height 
found  in  mercantile  buildings.  When  area  or  height  exceeds  this 
average  it  becomes  necessary  to  provide  special  treatment,  where- 
by the  regular  charges  can  be  properly  increased  to  care  for  the 
increased  hazard.  When  the  area  of  a  one-story  building  becomes 
much  less  than  the  average,  it  becomes  necessary  to  provide  special 
treatment  whereby  the  regular  charges  can  be  properly  decreased  to 
care  for  the  decreased  hazard.  For  these  reasons  exposures  are 
graded  as  normal  and  abnormal.  Normal  exposures  have  been 
treated  above.  Abnormal  exposures  are  graded  as  Nil,  Negligible, 
Small  and  Large.  "Nil  indicates  structures  so  small  that  they  may 
be  ignored  both  as  to  the  exposure  they  radiate  and  transmit. 
Negligible  indicates  risks  so  small  or  of  such  low  hazard  that  their 
radiated  exposure  may  be  ignored,  though  they  should  be  recog- 
nized as  transmitting  exposure  between  other  buildings.  Small  and 
Large  indicate  buildings  which,  according  to  their  ,  size,  radiate 
either  more  or  less  exposure  than  ordinary  mercantile  or  light  in- 
dustrial buildings  as  found  in  the  business  districts  of  towns  and 
cities." 

In  order  that  there  may  be  uniformity  in  the  grading  of  build- 
ings, the  following  Dimension  Table  is  provided,  "containing  esti- 
mates of  dimensions  of  large,  small  and  negligible  buildings:"      * 

Dimension  Table. 


Grades  of  Protection. 


Class  1,  2  and  3. 


Stories. 


r  Large 
P'rames,  iron-      I 
clads     and     -j         " 
brick     v  e  -    I    Small 
ri'jered.  L         " 

Negligible 


f  Large 


Dricks { 


I    Small 

I        " 
Negligible 


1 

2 

3  or  over 

1 

2 

1 


Gd.  fl.  area. 


8000 

5000 

All  bldgs. 

1000 

400 

400 


1 

2 

3 

4  or  over 

1 

1 


12000 

8000 

5000 

All  bldgs. 

1000 

500 

500 


Class  4,  4)4,  5  and  6. 


Stories. 

Gd.  fl.  area. 

1 

2 

3  or  over 

1 

5000 
3000 
All  bldgs. 
750 

1 

300 

1 

2 

3 

4  or  over 

1 


8000 

5000 

3000 

All  bldgs. 

750 


400 


Thus  a  one-story  frame  building  in   a   fifth-class  town  grades 
as  large  if  its  ground  floor  area  is  5.000  square  feet  or  over,  and 


70 


as  small  if  its  ground  floor  area  is  750  square  feet  or  less.  Be- 
tween these  two  dimensions  it  grades  as  ordinary  or  normal.  In 
case  buildings  are  used  for  extra  hazardous  occupancies,  such  as 
a  starred  ri?k,  the  dimensions  in  the  table  are  reduced  one-half. 

The  method  of  charging  exposures  from  buildings  which  grade 
as  large  or  small,  by  the  above  table,  is  comparatively  simple  In 
the  case  of  frame  buildings  the  method  is  the  same  as  for  ordinary 
exposure  except  that  the  Frame  Exposure  Table  shown  above  is 
modified  to  provide  smaller  reductions  for  space  where  the  building 
grades  as  large,  and  larger  reductions  where  the  building  grades 
as  small.  In  the  case  of  other  buildings  covered  by  the  General 
Exposure  Table  the  following  method  is  provided  : 

"S»tal!.     Refer  to  General  Exposure  Tables  and  lower  the  deci 
mal  and  the  denominator  of  the  fraction  showing  the  reduction  for 
space,  each  one  point;  i.   e.,  if  the  decimal  is  .3  and  the   fraction 
beneath  1/3,  change  to  .2  and  ]/:,  and  figure  out  the  result  as  for 
ordinary  exposures. 

"Large.  Raise  the  decimal  and  the  denominator  of  its  fraction 
in  General  Exposure  Tables  two  points  increasing  each  again  one 
point  for  each  additional  story  in  excess  of  the  smallest  number 
of  stories,  which  would  grade  building  as  large  regardless  of  area, 
vmtil  the  decimal  and  its  denominator  reach   ten.'' 

Special  Features  of  Exposure. 

The  foregoing  comprise  all  of  the  more  essential  features  of 
exposure  as  covered  by  the  Analytic  System.  There  are  a  few 
special  features  which  we  will  mention  before  concluding  our 
study. 

Falling  Wall  Exposure  is  charged  "when  a  building  is  exposed 
to  damage  from  falling  wall  of  a  brick  or  stone  building."  A 
charge  of  2  per  cent,  of  the  rate  of  the.  exposing  building  is  made 
if  the  exposing  waU  is  two  stories  higher,  increased  1  per  cent,  for 
each  story  over  two. 

Wall  Damage  Exposure  is  charged  when  the  letters  "W.  D." 
arc  found  in  the  General  Exposure  Table.  The  charge  covers  the 
damage  done  to  a  brick  or  stone  fire  wall  by  an  exposing  build- 
ing. It-consists  of  10  per  cent,  of  the  basis  rate  of  the  exposing 
building  plus  5  per  cent,  of  the  excess  of  its  final  rate  over  the 
basis  rate.  One-fourth  of  the  charge  is  deducted  for  each  5  feet 
of  clear  space  in  fourth,  four-and-a-half,  fifth  and  sixth  class 
towns,  and  a  further  reduction  of  20  per  cent,  is  made  in  fourth 
and  four-and-a-half  class  towns.  In  cities  of  Classes  1.  2  and  3. 
one-third  is  deducted  for  each  5  feet  of  space,  and  the  further  re- 
duction is' 40  per  cert.     One-half  of  the  net  charge  is  added  to  the 

71 


contents    rate    under   all    grades    of    protection,    except   first,    second 
and  third,  where  no  charge  to  contents  is  made. 

Buildings  of  unequal  height  present  many  small  but  difficult 
problems  under  exposure,  as  do  also  buildings  of  unequal  length. 
The  schedule  devotes  two  full  pages  to  these  problems,  such  as 
the  amount  of  exposure  to  be  charged  to  a  brick  building  exposed 
by  a  higher  frame  building  for  varying  heights  of  parapet  on  the 
brick  building,  or  to  a  brick  building  with  openings  above  the  roof 
of  a  lower  brick  or  frame  building,  or  to  a  brick  building  when  an 
exposing   frame  building  projects  beyond   its   rear. 

Angular  exposures  are  charged  when  the  exposing  and  exposed 
walls  are  not  parallel,  or  when  window  openings  in  same  are  not 
opposite  or  are  so  located  as  to  constitute  a  less  exposure  hazard 
than  otherwise.  Angular  exposures  are  graded  as  "Diagonal"  and 
"Glancing,"  depending  upon  the  degree  of  the  hazard  as  compared 
to  full  or  direct  exposure.  The  methods  used  in  charging  direct 
exposures  are  used  for  angular  exposures,  except  that  the  final 
charge  is  reduced  one-half  for  "Diagonal"  and  three-fourths  for 
"Glancing." 

Fire-stop  walls  are  sometimes  built  in  frame  rows,  and  when 
so  found  are  treated  as  the  equivalent  of  clear  space  in  figuring 
exposures  from  one  side  of  the  wall  to  the  other.  The  amount  of 
clear  space  for  which  credit  is  given  depends  upon  the  height  of 
the  wall  and  the  kinds  of  roof  upon  the  buildings  on  both  sides. 

Elective  exposures  arc  sometimes  found  among  buildings  or 
groups  located  "in  such  manner  that  it  is  possible  to  measure  the 
exposure  in  more  than  one  way.  In  such  cases  it  should  be  borne 
in  mind  that  exposure  flows  through  the  channel  of  greatest  haz- 
ard, and  should  be  figured  in  the  way  that  produces  the  highest 
exposure   charge." 

When  two  adjoining  buildings  or  sections  of  a  building  are 
separated  by  a  division  or  fire  wall,  with  all  openings  protected 
by  standard  fire  doors,  an  exposure  charge  is  made  from  each 
building  or  division  to  the  communicating  building  or  division. 
'This  charge  is  based  upon  the  assumption  that  a  fire  wall  with 
openings  so  protected  is  not  as  good  a  cut-ofif  as  a  blank  wall. 
The  charge  is  a  percentage  of  the  individual  rate  of  the  exposing 
building,  and  increases  with  the  combustibility  of  the  stock  of  th? 
exposing  building  and  the  damageability  of  the  stock  of  the  ex- 
posed building.  A  larger  charge  is  made  for  a  communication 
with  a  standard  door  on  one  side  of  the  division  wall  than  for  a 
communication  with  a  standard  door  on  each  side.  The  charge 
is  increased  one-fifth  for  each  opening  over  one  up  to  double  the 
charge.  Total  charge  should  in  no  case  exceed  80  per  cent,  of  the 
increase  that  would  result  if  both  buildings  were  rated  as  one  risk. 

72 


A  small  charge,  called  "Siarrcd  Risk  Exposure,"  is  made  from 
a  starred  risk  tiirough  a  party  or  division  wall  without  openings. 
In  much  the  same  manner,  when  a  building  contains  explosive  con- 
tents, 5  per  cent,  of  its  individual  rate  is  charged  through  a  party 
or  division  wall. 

With  "Starred  Risk"  and  "Explosion"  exposure  we  complete 
the  study  of  exposure  and  approach  the  conclusion  of  our  study 
of  the  Analytic  System.  The  predominating  imprcssiun  left  by 
such  a  concise  discussion  of  the  details  of  the  schedule  is  neces 
sarily  one  of  confusion.  The  one  question  which  doubtless  has 
been  in  your  minds  most  frequently  has  ha  !  reference  to  the 
practicability  of  such  close  analysis,  such  completeness.  V/hy  go 
to  the  large  expense  of  the  application  of  sucli  a  complicated  sche- 
dule? Do  all  of  these  minor  features  of  a  building  and  its  occu- 
pancy warrant  specific  treatment?  Perhaps  I  can  best  answer  this 
vital  question  by  quoting  from  a  very  recent  utterance  by  ]Mr.  Dean: 

"Nothing,  perhaps,  more  clearly  shows  the  universal  neces- 
sity for  measurement  than  the  fact  that  as  competition  increases 
and  the  necessity  for  a  more  rigid  application  of  economics  is 
forced  upon  each  industry,  there  is  a  corresponding  demand  for 
an  increasing  nicety  of  distinction  and  ilncr  discriminations  in 
its  measurements.  When  there  is  little  competition  and  profits 
are  large  and  sure  in  any  given  branch  of  industry,  prices  may 
be  arbitrarily  fixed  without  close  computations,  but  when  eveiy- 
body  is  sailing  close  to  the  shore  of  cost,  every  item  counts  and 
measurements  necessarily  become  more  minute.  *  ^  *  Compari- 
sons of  fire  insurance  rates  spring  up  from  all  corners  of  the  land. 
When  a  risk  is  rated  this  week,  say,  in  Minneapolis,  the  owners  of 
like  risks  in  Oklahoma  City  or  Columbus,  Ohio,  are  likely  to  be 
heard  from  next  week  wanting  to  know  why  they  arc  discriminated 
against,  and  it  is  necessary  to  satisfy  the  complainants  by  a  de- 
tailed comparison,  item  by  item.  All  this  is  the  result  of  pub- 
licity and  comparison  between  the  membership  in  mercantile  and 
manufacturing  associations,  and  to  an  even  greater  degree  to  com- 
parisons made  by  trusts,  of  the  rates  made  on  their  widely  scattered 
properties.  All  these  criticisms  resulting  from  the  spread  of  in- 
formation and  comparison  can  be  met  only  by  the  application  of 
schedules  that  take  account   of   every  tangible   feature  of  hazard." 

In  closing  this  somewhat  lengthy  presentation  of  the  principles 
and  methods  of  operation  of  the  Analytic  System,  I  have  a  con- 
fession to  make.  As  we  have  moved  through  this  large  amount 
of  detail  the  temptation  has  often  been  strong  to  pass  over  the  com- 
paratively uninteresting  parts  and  give  you  a  less  monotonous  and 
therefore  more  popular  treatment  of  the  schedule,  such  a  treat- 
ment,   perhaps,    as    would    have    interested    the    intelligent    property 

73 


owner.  But  I  have  thought  that  your  purpose,  and  I  know  that 
my  purpose  has  been  deeper  than  that.  T  have  thought  that  your 
club  desired  to  be  the  sponsor  of  perhaps  the  first  serious  detailed 
commentary  on  the  system  and  I  have  attempted  to  give  that  to 
you  to  the  best  of  my  ability.  Sacrificing  mere  superficial  discus- 
sion of  the  schedule,  we  have  attempted  to  give  it  a  thorough 
exposition  from  cover  to  cover,  such  an  exposition  as  cannot  be 
grasped  by  one  unfamiliar  with  rating  systems  in  one  evening  or 
several  evenings,  but  one  that  will  bear  future  thought  and  study. 
You  have  been  remarkably  patient  with  this  attempt  and  I  thank 
you  cordially  for  your  kindness.  Familiarize  yourselves  with  the 
schedule  and  then  watch  with  interest  and  intelligence,  as  the 
Analytic  System  like  the  soul  of  old  John  Brown  goes  "march- 
ing on." 


74 


Example 


OF 


Block  Rating: 


March  23,  1909 


>•' 


6ro<fn, 

z ^ 


/ 


12 

'I 

2i 


^2 
\BQrtli 

r   3 


Z  X 


^ '  ^^ 


:$ 


-^    <^ 


■:^  i  f$i«: 


\ 


;!  /H,  Qanc/u    it 

:,.//  /      1    Fdc/oro'" 


i//y. 


y 


Note. — Tlic  references  in  the  follciwing  pages  are  f(ir  the  1909 
edition.  The  letters  "A."  "B,"  "C"  and  "D"'  refer  lu  the  four  sec- 
tions of  the  book. 


Basis  Tables:  Brick  No.  60  (A,  page  16)  ;  Frame  No.  95  (B,  page  7). 
Contents  Table:   No.  70   (A,  page  89). 
Public   Protection :   Fourth  Class. 


77 


INDIVIDUAL    RATES. 

Building  No.  1.     Basis  rate,  1-story  frame  (B,  page  7)  $0.82 

Area.  50  ft.  x  30  ft.  equals  1,500  square  ft.  on  one 

floor,  no  charge  (B,  page  9,  item  1). 

Chimney  on  brackets   (B,  page  9,  item  3a) 8% 

Occupancy,  Drugs,  60%  plus  20%   (B,  page  21)...  80% 

Paints  and  oils  kept  (C,  page  24,  item  d) 10% 

Total    98% 

Credit,    approved    composition    roof     (B,    page    9, 

item   4)    10% 

Net    88%  .72 

Individual  rate   $1.54 

Building  No.  2.     Basis  rate,  1-story  frame  (B,  page  7)  $0.82 

Area,  75  ft.   x  30  ft.  equals  2,250  square  ft.  on   1 
floor,  no  charge  (B,  page  9,  item  1). 

Foundation  open    (B,  page  9,  item  2) 8% 

Occupancy,  Grocery   ( B,  page  26) 50% 

Total    58%,  .48 

Individual  rate   $1.30 

Building  No.  3.     Basis  rate,  2-story  brick  (A,  page  16)  $0.49 

Area,  60  ft.  x  30  ft.  equals   1,800  square   ft.   on   1 

■floor    (A,   page   20) 2% 

Walls,   12   12,   standard    (A,   page   11),   no   charge 

(A,  page  21,  item  2a). 
Parapets,  Left,  building  1   story  lower,  no   charge 

(D,  page  28,  item  h). 
Right,  12  inches  high  (A,  pages  10  and  21,  item  2c)     2% 
Cornice  wood,  not  cut  off  (A,  page  24,  item  10c) . .    5% 
Occupancy,  Bank,  no  charge   (A,  page  29). 

Dwelling,  no  charge    (A,   page  43). 


Total    9%  .04 

Individual  rate  $0.53 


78 


Building  Xo.  4.     Basis  rate,  2-story  frame  (B,  page  7)  $0.86 

Area,  35  ft.  x  60  ft.  equals  2,100  square  ft.  on  V/2 

floors,  no  charge  (B,  page  9,  item  1). 

Stove  pipe  through  roof   (B,  .page  9,  item  3d)....  20% 

Occupancy,  Meats,  see  Butcher  Shops  (B,  page  16)  50% 

Rendering     Kettle     on     wood     floor,      (C2),     see 

furnace  table   (C,  page   18.  fi-xed  furnace  with 

kettle),  25%   doul)led   account   wood  floor    (C, 

page   19,  item  3) 50% 

Dwelling,  no  cliargc   (  B,  page  21). 

Total   120%  1.03 

Individual   rate    $1.89 

Building  Xo.  5.     Ba.^^is  rate,  2-story  brick  (A,  page  16)  $0.49 

Area,  75  ft.  x  100  ft.  equals  7.500  square  feet  on  1^ 

floors    (A,  page  20) 11% 

Side  Walls,  no  charge  (.'\,  page  21,  item  2a). 
Front  Wall,  iron  and  glass,  2  stories   (A,  page  22, 

item  2h) 3%   plus  2%  equals    5% 

Parapets.    Right,    building    4    stories    higher,    no 
charge   (D,  page  28.  item  li). 
Left,  standard,  no  charge. 
Ceiling,  word.  Ut  floor   (.\.  page  22.  item  4a')....    2% 
Floorway  openings  : 

First  floorway  (between  basement  and  1st 
story)  ;  floor  is  double  1-inch  slufl"  not 
ceiled  and  tlitrcfore  grades  as  "B"  (\, 
page  12)  ;  openings,  5  stairs  and  1  elevator, 
unprotected,  and  therefore  grades  as  "be- 
low a"   (.\,  page  13)  ;  charge  is  5%+5%  (.\, 

page  22.  itrni  7) 10% 

Second  floorway  (between  1st  and  2nd  stories)  ; 
floor  is  double  ceiled  and  therefore  grades 
as  "B"  (A.  page  12)  ;  no  openings  except 
stairs  from  street  to  second  story,  enclosed 
in  wood-lath  and  plaster  partition,  and 
therefore  grades  as  "a"  (A,  page  13)  ; 
no  charge  (A,  page  22,  item  7). 
Partitions  between  occupants  on  ground  floor  and 

basement,  wood,  two   (A,  page  23.  item  8a)...    6% 

79 


Occupanc}',  Millinery,  retail,  3  trimmers. 

(A.  page  61) W/o     207o 

Tailor  Shop,  2  hands,   (A,  page  78)..107o     10% 

Plumbing  Shop,  2  hands,  (A,  page  68). 10%     10% 

2  charcoal  soldering  pots   (C2)    (see 

furnace  table  (C)  page  18,  hand 

furnace).  7%-  plus  1/5  account  1 

additional  pot   (C,  page  19,  item 

2)    8% 

Coffees  and  Teas  (A,  page  37) 5%     10% 

Hall    (Lodge)    (A,  page  50) 3% 

Occupancy  charge  is  sum  of  column  1  charges  add- 
ed to  highest  column  2  charge  (10%  plus  10% 
plus  10  %  plus  8  %  plus  5%  plus  3%  equals 
46%  added  to  20% 66%, 

Total   100%  .49 

Occupied   building   rate    (gross) $0.98 

Credit,   steam  heat   from  outside  source    (A,  page 

87,   item   g) , S%  .05 

Individual  rate       $0.93 

Building  No.  6.     Basis  rate,  6-story  brick  (A.  page  16), 

.55  plus  .07  and  .07 $0.60 

Area,  100  ft.  x  50  ft.  equals  5,000  square  ft.  on  6 

floors    (A,  page  20) 22% 

Supporting  walls,  right,  party,  ordinary  occupancy, 
average  thickness  18  inches,  which  is  deficient 
1  inch  from  standard  of  19  inches  (A,  page  11)  ; 

charge  (A,  page  21,  item  2a) 1% 

Not   ledged    (A,   page    12,   item   a),   charge    (A, 

page   21 ,    item   2b ) 6% 

Left,  exterior,  average  thickness  18  inches,  which 

is  deficient   1   inch   fr'im  standard  of   19  inches 

(.'\,  page  11)  ;  charge  (A,  page  21,  item  2a)..    1% 

Parapets,  Right  and  Left,  exposing  buildings  1  story 

or  more  lower,  no  charge  (D,  page  28,  item  h). 

Floorway  openings  : 

y\ll  floorways  are  double  1-inch  stuff  without 
ceiling  and  therefore  grade  as  "B"  (A, 
page  12)  ;  1  elevator  through  all  floorways 
protected    by    automatic    traps    of    1-inch 

80 


stuff  covered  witli  tin  on  under  side  and 
therefore  grading  as  "a"  (A,  page  13)  ;  1 
dumb  waiter  through  three  lower  floorways 
protected  by  automatic  traps  same  as  eleva- 
tor;  1  stairway  througli  all  fluorways  un- 
protected and  therefore  grading  as  "be- 
low a"  (A,  page  13).  Charge  for  6  floor- 
ways  ("B")  with  one  opening  in  each 
floorway  ("below  a"),  6X5%  (A,  page 22)  30% 
Occupancy.    Lic|unrs.    wholesale    (A,   page  57)    5% 

phis    10%    157o 

Rectifying,  cold   process,   2  hands,   charge   labor 

(C2)   (C,  page  14) 10% 

Open  motor  (C2)   (D,  page  15) 10% 

Total    95%  .65 

Occupied  building  rate   (gross) $1.35 

Credits  for  protective  features   (A,  page  86). 

Outside  standpipe  and  fire  escape 4% 

Approved  chemical   extinguishers 5% 

Total  credits   9%  .12 

Individual  rate   $1.23 

Building  No.  7.     Basis  rate,  5-story  brick  (.\.  page  16). 

.55  plus   .07 $0.62 

Area,  65  ft.  x  95   ft.  equals  6,175  square  ft.  on  6 

floors  including  basement  (A.  page  20) 26% 

Supporting  walls.  Right,  exterior,  average  thickness 
16  inches,  which  is  deficient  4  inches  from 
standard   of    18  inches    (.-\,   page    12)  ;   charge 

(A,  page  21,  item  2a) 2% 

Left,  party,  average  thickness  19  inches,  which  is 

standard,  no  charge. 
Not   ledged    (A.   page    12,   item   a),   charge    (A, 

page  21,  item  2b) 6% 

Parapets,  Right  unexposed,  no  charge  (A,  page  21. 
item  2c,  note). 
Left,    adjoining    building    1     story    higher    with 
opening  18  inches  above  roof,  no  charge    (D, 
page  28,  items  h  and  k). 

Total  deficiency  charge 34% 

81 


Floorway  openings : 

All  floorways  are  semi-mill  construction  and 
therefore  grade  as  "C"  (A,  page  12)  ; 
stairway  and  dumb  waiter  in  brick  shaft 
through  roof  with  standard  automatic  fire 
doors  on  openings  and  therefore  grading 
"d"  (A,  page  13)  ;  1  elevator  from  base- 
ment to  Sth  story  with  openings  protected 
by  standard  tin-clad  automatic  traps,  and 
therefore  grading  as  "c"  (A,  page  13), 
Credit  for  5  floorways  ("C")  with  retinue 
"c,"  5X2%    (A,   page  22) ' 10% 

Net    deficiency    charge 24% 

Occupancy,    candy    factory    and    bakery    (A,    page 

34),  25%  plus  40% 65% 

65  hands,  additional  labor  (CSy^)    (C,  page  14).  42% 
6  open  motors    (C3j^)    (C,  page   15),  20%  plus 

5/5  of  20%    (C,  page  16,  item  la) 40% 

Furnaces,  sec  furnace  table  (C3;/^)  (C,  page  18)  ; 
3  ovens,  coke  fuel,  35%  plus  2/5  of  35%  (C, 
page  19,  item  2)  equals  49% ;  5  candy  kettles, 
gas  fuel,  55%  plus  4/5  of  55%  equals  99%  (C, 
page  19,  item  2)  reduced  ^  for  gas  fuel  (C, 
page  19,  item  la)  equals  50%;  total  charge, 
49%  plus  50%  equals  99%;  maximum  charge, 
35%X2  (C,  page  19,  item  2,  note) 70% 

Total 241%         1.49 

Occupied   building    rate    (gross) $2.11 

Credits   (A,  page  86)  : 

Structural    features.      All    floorways    grade    as 

"C"    (item  b) 10%  .21 

$1.90 
Protective  features.     Inside  standpipe  and  hose    5%  .09 

Individual  rate   $1-81 

82 


EXPOSURES. 

Exposure  standard   for  a   fourtli  class  town  is  33'/3%  of  the  indi- 
vidual rate  (D,  pages  3  and  4  and  column  2  in  table,  page  4). 

Exposure  buildings  Nos.  1  and  2  to  building  Xo.  3 : 

Buildings  1  and  2  are  a  solid  frame  row  (D,  page  9)  and 
therefore  radiate  exposure  as  if  they  were  one  building 
bearing  a  rate  equal  to  the  total  rates  of  the  two  buildings 
(D,  page  16,  note).  Exposure  standard  is  therefore  1.54 
plus  1.30  equals  2.84X33V3%  equals  .95.  Direct  exposure 
is  .95X.4  equals  .38  (frame  building  exposing  B  Xo.  1 
building,  table  D,  page  6).  On  account  of  blank  wall  on 
left  side  of  building  3,  with  openings  only  in  rear  wall, 
exposure  will  be  diagonal  (D,  page  29)  or  'A  of  direct  (D,. 

page  29.  item  c,  note)  ;  '/a  of  .38 13 

Wall  damage  exposure  to  left  wall  of  building  3  is  figured 
from  the  final  rate  of  building  2,  which  is  1.54  plus  2)1^1^% 
of  1.30  equals  1.97  (D,  page  9)  ;  10%  of  basis  rate  of  build- 
ing 2  (C,  page  24)  is  10%  of  .82  equals  .08..  Excess  of 
final  rate  over  basis  rate  of  building  2  is  1.97  less  .82  equals 
1.15:  5%  of  1.15  equals  .06.  .08  plus  .06  equals  .14X80% 
(fourth  class)    11 

Exposure  building  4  to  building  3: 

Exposure  standard  is  33V3%  of  1.89  equals  .63X.4   (frame 

to  B.  Xo.  1) 25 

Total  exposure  received  by  building  3 49 

Exposure  building  3  to  row  of  buildings  1  and  2: 

Exposure  standard  is  33'/=%  of  .53  equals  .18X.3   (B.  Xo.  1 

to    frame)    ^^ 

Transmitted  exposure  from  building  4  to  buildings  1  and  2 
through  building  3  is  .25  (see  above)  X  .3  (B.  Xo.  1  to 
frame)     ^" 

Total  exposure  received  by  row  of  buildings  1  and  2 12 

Exposure  building  3  to  building  4: 

33Vs%  of  .53  equals  .18X.3 05 

Transmitted  exposure  from  buildings  1  and  2  to  building 

4  through  building  3  is  .13   (see  above)    X   .3 04 

Total   exposure  received  by  building  4 09 

83 


Exposure  building  7  to  building  6 : 

Exposure  is  through  roof  of  7  into  windows  of  6.  Standard 
is  33V3%  of  1.81  equals  .60;  the  decimal  ratio  of  exposure 
standard  for  5-story  brick  building  exposing  brick  building 
is  .5  (D,  page  33)  ;  charge  is  .60X.5 30 

Exposure  building  5  to  building  6: 

33V3%  of  .93  equals  .31  ;  exposing  building  grades  as  "large" 
(D,  page  32)  and  decimal  ratio  of  exposure  standard  is  .4 
(D,  page  33)  ;  charge   is  .31X.4 12 

Total  exposure  received  by  building  6 42 

Exposure  building  4  to  building  5 : 

Wall  damage  only  (D,  page  24);  basis  rate  of  building  4 
is  .86;  final  rate  is  1.89  plus  .09  (see  above)  equals  1.98; 
charge  is  10%  of  .86  equals  .09  added  to  5%  of  (1.98  less 
.86  equals)    1.13  or  .06  equals  .15x80%    (fourth  class) 12 

Exposure  building  6  to  building  5 : 

2yi%  of  1.23  equals  .41;  the  decimal  ratio  of  exposure 
standard  for  6-story  brick  building  exposing  brick  build- 
ing is  .6  (D,  page  2,2>)  ;  .41X.6  equals  .25;  exposure  is  di- 
agonal from  windows  in  left  wall  of  building  6  back  of 
building  5  on  1st  and  2nd  stories  to  windows  in  rear  wall 

of  building  5;  charge  is  ^  of  .25 12 

Falling  wall  exposure    (D,  page  23),  4  stories  higher,  4%' 

of    1.23 05 

Total  exposure  received  by  building  5 29 

Building  7  receives  no  exposure. 

FINAL  BUILDING  RATES. 

Building  Numbers         1          2          3  4  5        6  7 

Individual  rates  (see  above)  1.97     (row)       .53  1.89  .93  L23  1.81 

Exposure  charges  "         "       _^12 .49  .09  .29      .43  .00 

Final  building  rates                2.09     2.09      1.02  1.98  1.22  1.66  1.81 

FINAL  CONTENTS  RATES. 

Building  No.  1,  Drugs,  Exposure  load  to  building  i^s  difference 
between  individual  rate  of  building  and  final  rate :  2.09  less 
1.54  equals  .55.  Exposure  load  to  contents  (D,  page  9)  is 
90%  of  .55  equals  .50  (D,  page  9,  contents  removability 
table,  fourth  class,  semi-removable).  Rate  on  drugs  is 
therefore    1.54  plus   .50 2.04 

84 


Building  No.  2,  Grocery,  removable  (B,  page  26)  ;  exposure 
load  to  building  is  2.09  less  1.30  equals  .79;  exposure  load 
to  contents  is  80%  (D,  page  9)  of  .79  equals  .63.  Rate  on 
grocery  is  therefore  1.30  plus  .63 1.93 

Building  Xo.  3,  Bank,  non-removable,  in  brick  building,  add 
contents  differential  to  final  building  rate.  D2  (A,  page 
29)  on  1st  floor  is  .26  (A.  page  89,  fourth  class)  ;  1.02  plus 

.26  equals  1.28  less  .05   (yi  wall  damage.  D.  page  24) 1.23 

Dwelling,  D2  (A,  page  43)  on  second  floor  (A,  page  89), 
1.02  plus  .35  equals  1.37  less  .05  {l/y  wall  damage,  D,  page 
24)    1.32 

Building  No.  4,  Meats,  non-removable  in  frame  building,  add 
contents  differential  to  final  building  rate.  D3  (Butcher 
Shops,  B,  page  16)   is  .13  { B.  page  58,  fourth  class)  ;   1.98 

plus  .13    2.11 

Dwelling,  2nd  floor,  non-removable,  same  rate  as  building  1.98 

Building  Xo.  5.  Millinery,  non-removable,  D4  (A,  page  61)  on 
1st  floor,    (A,  page  89),   1.22  plus   .41    equals   1.63   less   .06 

(l/j   wall  damage,   D,  page  24) 1.57 

Tailor,  removable,  D2  (A,  page  78)  on  1st  floor  (A,  page 
89),  1.22  plus  .26  equals  1.48  less  .06  (lA  wall  damage,  D, 
page  24)    (no  credit  for  removability  account  exposure,  not 

including  wall  damage,  less  than  .20,  D,  page  23) 1.42 

Plumbing,  non-removable  and  Dl^  (A,  page  68)  ;  1.22  plus 
.21   (A,  page  89)  equals  1.43  less  .06  {lA  wall  damage)....    1.37 
Coffees  and  Teas,  non-removable  and  02^/2    (A,  page  37)  ; 
1.22  plus   .34   (A,   page  89)    equals   1.56  less   .06   ('/.   wall 

damage) 1.50 

Lodge  Hall,  non-removable  and  D2  (A,  page  50)  :  1.22  plus 

.35  (A,  page  89)  equals  1.57  less  .06  (V^  wall  damage)....    1.51 

Building  No.  6.  Wholesale  liquors,  non-removable,  D2  (A,  page 
57)  on  all  floors  from  basement  to  6th:  contents  differential 
(.A,  page  89)  is  average  of  .35.  .26.  .35,  .41.  .47.  .47  and  .47. 
which  equals  .40 ;  rate  is  1.66  plus  .40 2.06 

Building  No.  7.  Candy  factory,  non-removable,  D3  (A.  page 
34)  on  all  floors  from  basement  to  5th ;  contents  differential 
(A.  page  89)  is  average  of  .52.  .41.  .52.  .58,  .65  and  65. 
which  equals  .56 ;  rate  is  1.81  plus  .56 2.37 


85 


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